A Firm Seeks an Internal Rate of Return of at Least

question 203

Multiple Choice

A firm seeks an internal rate of return of at least 9%. Would it make sense for the firm to spend $10,000 today on a piece of equipment that will allow it to bring in $5,600 of additional revenue in each of the next two years?

• A) Yes, because the rate of return exceeds 9%.
• B) Yes, because the rate of return is exactly the desired 9%.
• C) No, because the rate of return is less than 9%.
• D) It is impossible to determine with the information given.

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Definitions:

Motion

The process or act of relocation or movement.

Debris Flow

A rapid downhill movement of a mixture of water, soil, and rock, often triggered by heavy rainfall or rapid snowmelt, behaving much like a river of concrete.

Rock Avalanche

A rapid, massive flow of rock debris down a slope, typically triggered by seismic activity or the undercutting of a mountain's base.

Rock Fall

A rock fall refers to the rapid descent of rock from a steep cliff or mountainside, often triggered by natural processes like weathering or human activities.