A Project Requires an Initial Investment of $10,000, Straight-Line Depreciable

question 76

Multiple Choice

A project requires an initial investment of $10,000, straight-line depreciable to zero over four years. The discount rate is 10%. Your tax bracket is 34% and you receive a tax credit for negative earnings
In the year in which the loss occurs. Additional information for variables with forecast error are
Shown below. Suppose you want to conduct a sensitivity analysis for the possible changes in unit sales. What is
The IRR when the sales level equals 3,250 units?

• A) 32.6%
• B) 42.8%
• C) 57.9%
• D) 118.6%
• E) 121.5%

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