Warr Company Is Considering a Project That Has the Following

question 66

Multiple Choice

Warr Company is considering a project that has the following cash flow data.What is the project's IRR? Note that a project's projected IRR can be less than the WACC or negative,in both cases it will be rejected.
? $$\begin{array} { l c c c c c } \text { Year } & 0 & 1 & 2 & 3 & 4 \\\hline \text { Cash flows } & - \$ 1540 & \$ 400 & \$ 400 & \$ 400 & \$ 400\end{array}$$
?

• A) 4.13%
• B) 0.99%
• C) 5.41%
• D) 3.58%
• E) 1.22%

---

Definitions:

Material Price Variance

The difference between the actual cost of direct materials and the expected (standard) cost, indicating budgetary performance.

Direct Materials

Raw materials that can be directly attributed to the production of goods.

Variable Manufacturing Overhead

Costs that fluctuate with production volume, such as raw materials and direct labor.

Direct Labour Hours

The overall work hours of staff directly engaged in creating products.