Colex Wishes to Bid on a Contract That Is Expected

question 17

Multiple Choice

Colex wishes to bid on a contract that is expected to yield after-tax net cash flows of $25,000 in year 1, $30,000 in year 2, and $35,000 per year in years 3-8. To obtain the contract, Colex will need to invest $110,000 to reconfigure a packaging system, $20,000 (after-tax) to retrain current employees, and $15,000 (after-tax) on an environmental impact study that is required to be completed on acceptance of the contract. What is the project's internal rate of return?

• A) 16.7%
• B) 14.1%
• C) 16.2%
• D) 14.9%

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Definitions:

Hell-Volhard-Zelinsky

A chemical reaction that halogenates carboxylic acids at the alpha carbon with a bromine or chlorine in the presence of phosphorus.

Organic Product

A compound or material derived from living organisms, or synthetically produced to mimic such substances.

Major Organic

Typically refers to the primary or most significant organic compound or reaction product in a given chemical process.

Fischer Esterification

A chemical reaction between an alcohol and carboxylic acid in the presence of an acid catalyst to produce an ester and water.