The Conroy Co

question 65

Multiple Choice

The Conroy Co. wants to purchase a machine for a new product line that costs $138,750. The company's engineering department estimates the machine will last 10 years and provide an annual contribution margin of $25,000. Ignore income taxes. The internal rate of return to the nearest tenth of a percent is:

• A) 12.4%
• B) 11.6%
• C) 13.46%
• D) 12.64%

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Definitions:

SOX

Refers to the Sarbanes-Oxley Act of 2002, a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms, aiming to protect investors from fraudulent financial reporting.

Public Accounting Firms

Professional services organizations that provide accounting, audit, tax, and consulting services to businesses and individuals.

Real Risk-free Rate

The rate of return on an investment with no risk of financial loss, adjusted for inflation.

Federal Reserve

The central banking system of the United States, responsible for implementing monetary policy, regulating banks, and ensuring financial stability.