What Is the Internal Rate of Return for a Project

question 162

Multiple Choice

What is the internal rate of return for a project that requires an initial outlay of $92,000 and generates a single cash inflow of $25,750 in 5 years?

• A)10%
• B)12%
• C)15.3%
• D)13.1%

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Definitions:

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers.

Average Collection Period (ACP)

A financial ratio that measures how long it takes to collect on credit sales. Also called days sales outstanding (DSO).

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, which encompass payment period, amount of credit, and the discount terms.

Cash Discount

A reduced price offered by a seller for goods or services if the buyer pays in cash, or within a specified time period, encouraging early payment.