An Investment Project Requires a Net Investment of $100,000

question 14

Multiple Choice

An investment project requires a net investment of $100,000.The project is expected to generate annual net cash inflows of $28,000 for the next 5 years.The firm's cost of capital is 12 percent.Determine the internal rate of return for the project (to the nearest tenth of one percent) .

• A)12.0%
• B)12.6%
• C)3.6%
• D)12.4%

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Definitions:

Equal Payments

Regular payments of the same amount over a specified period, typically used in installment plans or loans.

Paid Off

A term indicating that a debt or obligation has been fully settled and no amount remains due.

Focal Date

A specific point in time that is significant or used as a reference for financial calculations.

Scheduled Payments

Regularly planned amounts of money to be paid, often referring to loans or debt repayment.