Use the Following Table $\text { Present Value of an Annuity of } 1$

question 150

Multiple Choice

Use the following table, $\text { Present Value of an Annuity of } 1$
$\begin{array}{lrrr}\text { Period }&8\%&9\%&10\%\\1 & .926 & .917 & .909 \\2 & 1.783 & 1.759 & 1.736 \\3 & 2.577 & 2.531 & 2.487\end{array}$ A company has a minimum required rate of return of 8%.It is considering investing in a project that costs $379,650 and is expected to generate cash inflows of $150,000 each year for three years.The approximate internal rate of return on this project is

• A)8%.
• B)9%.
• C)10%.
• D)The IRR on this project cannot be approximated.

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Definitions:

Charge Accounts

Credit accounts provided by retailers to customers, allowing them to purchase goods or services on credit and pay at a later date.

Demand for Money

The desire to hold cash or liquid assets instead of investing or spending, influenced by interest rates, economic conditions, and personal financial situations.

Fed Targeting

Fed targeting involves the Federal Reserve using monetary policy tools to aim for specific economic targets, such as inflation rates or employment levels.

Money Supply

The whole assembly of monetary resources in an economy at a certain time period.