A 25- Year Project Has a Cost of $1,500,000 and Has

question 68

Multiple Choice

A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate
The IRR of the project.

• A) 30.25%
• B) 28.28%
• C) 26.22%
• D) 24.25%
• E) 22.25%

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Definitions:

Compounded Quarterly

Interest calculated four times a year, applying on the original principal and including interest accumulated in previous periods.

Quarterly Payments

Quarterly payments are those made four times a year, often used in the context of financial arrangements like loans, leases, and investment dividends.

Compounded Monthly

Involves the calculation of interest by applying the interest rate to the sum of the initial principal and any accumulated interest, repeated monthly.

Economic Value

The measurement of the benefit provided by a good or service to an economic agent.