Project a Has a Cost of $1,000, and It Will

question 45

Multiple Choice

Project A has a cost of $1,000, and it will produce end-of-year net cash inflows of $500 per year for 3 years. The project's required rate of return is 10 percent. What is the difference between the project's IRR and its MIRR? (Round off the answer to two decimal places.)

• A) 3.88%
• B) 4.31%
• C) 5.09%
• D) 5.75%
• E) 6.21%

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Definitions:

Per Share Dividend

The amount of dividend that is paid out for each share of a company's stock.

Dividend Increase

A rise in the amount of money paid to shareholders out of a company's earnings per share.

Annual Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits on a yearly basis.

Dividends Increase

An action by a company to increase the amount of dividends paid to shareholders, typically signaling confidence in the company's profitability.