Maxwell Feed & Seed Is Considering a Project That Has

question 20

Multiple Choice

Maxwell Feed & Seed 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 (and even negative) ,in which case it will be rejected. $$\begin{array} { l c c c c c c } \text { Year } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash flows } & - \$ 6,750 & \$ 2,000 & \$ 2,025 & \$ 2,050 & \$ 2,075 & \$ 2,100\end{array}$$

• A) 15.45%
• B) 17.17%
• C) 13.74%
• D) 15.61%
• E) 12.96%

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Definitions:

Negative Linear Relationship

A relationship in which increases in the values of the first variable are accompanied by decreases in the values of the second variable.

Operational Definitions

Specific articulations of a concept or variable in terms of the procedures or techniques used to measure or manipulate it.

Construct Validity

The degree to which a test or instrument measures the theoretical construct or psychological concept it intends to measure.

Construct Validity

Construct validity refers to the degree to which a test measures what it claims, or purports, to be measuring.