Simkins Renovations Inc A $13.13 \%$ B $14.44 \%$ C $15.89 \%$ D $17.48 \%$

question 32

Short Answer

Simkins Renovations Inc. 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. $\begin{array}{c}\begin{array}{lll} \text {Year}\\\text {Cash flows}\end{array}\begin{array}{lll} 0 \\\hline -\$850 \end{array}\begin{array}{lll}1 \\\hline \$300\end{array}\begin{array}{lll}2 \\\hline \$290\end{array}\begin{array}{lll}3 \\\hline \$280\end{array}\begin{array}{lll}4 \\\hline \$270\end{array}\end{array}$

a $13.13 \%$
b. $14.44 \%$
c. $15.89 \%$
d. $17.48 \%$
e. $19.22 \%$

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Definitions:

5%

Often used as a significance level in hypothesis testing, indicating a 5 percent risk of concluding that a difference exists when there is no actual difference.

Model Significant

A statistical model that achieves significance levels indicating that it provides reliable predictions or insights.

Alpha

Often used in statistics to denote the level of significance, the threshold at which the null hypothesis is rejected in hypothesis testing.

Coefficient Of Determination

A measure of the goodness of fit of the estimated regression equation. It can be interpreted as the proportion of the variability in the dependent variable y that is explained by the estimated regression equation.