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:

Incentives

Things that attract or lure people into action.

Biological Needs

Fundamental requirements that organisms must fulfill to maintain their bodily functions and ensure survival, such as the need for food, water, and shelter.

Drive

A psychological tension and physical arousal arising when there is a need that motivates the organism to act in order to fulfill the need and reduce the tension.

Tension

The state of being stretched tight or experiencing mental or emotional strain.