Use the Following Table for Questions

question 72

Multiple Choice

Use the following table for questions .
-A company has a minimum required rate of return of 8% and is considering investing in a project that costs $67,145 and is expected to generate cash inflows of $27,000 each year for three years.The approximate internal rate of return on this project is

• A)8%.
• B)10%.
• C)9%.
• D)less than the required 8%.

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Definitions:

Contribution Margin

The difference between the sales revenue generated from a product or service and the variable costs associated with its production and sales.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold and excludes fixed manufacturing overhead.

Absorption Costing

A costing method that includes both variable and fixed manufacturing overhead costs in the cost of a product.

Net Income

The net income a business realizes once it has subtracted all outgoings and fiscal charges from its revenue.