A Project Produces the Following Cash flOws Over the Next

question 276

Multiple Choice

A project produces the following cash flows over the next five years: $600, $200, $350, $400 and $500, respectively. The initial cost of the project is $1,400. What is the internal rate of return on this
Project?

• A) - 4.56%
• B) 3.67%
• C) 12.87%
• D) 14.39%
• E) The rate cannot be computed with certainty.

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Definitions:

Big Picture

An overview or broad perspective of a situation or concept, emphasizing the overall scenario rather than specific details.

Economizing Problem

The issue of limited resources to meet unlimited wants, necessitating choices and prioritizations in the use of resources.

Limited Resources

The finite availability of inputs or resources (labor, capital, land) that can be used for the production of goods and services.

Unlimited Wants

The economic concept that human desires and needs are constant and infinite, whereas the resources to fulfill them are limited.