A Particular Investment Requires an Initial Cash Outflow of $110,000

question 35

Multiple Choice

A particular investment requires an initial cash outflow of $110,000. The investment is expected to produce net cash flows of $20,000, $25,000, $30,000, $38,000, and $50,000 in years
One, two, three, four, and five, respectively. To the nearest tenth of a percent, the internal rate
Of return on this investment is

• A)67.5%.
• B)48.2%.
• C)12.5%.
• D)No IRR exists for these cash flows.

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Definitions:

Wholly Owned Subsidiaries

Companies whose entire share capital is held by another company, typically referred to as the parent company.

Intellectual Property

Legal rights that protect creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce.

Greenfield Operation

A greenfield operation involves a company starting a new venture from the ground up in a foreign country, rather than purchasing or partnering with an existing local company.

Subsidiary Company

A company that is owned or controlled by another company, which is referred to as the parent company.