Nichols Inc A) 943%
B) 9

question 9

Multiple Choice

Nichols Inc.is considering a project that has the following cash flow data.What is the project's IRR? Note that a project's IRR can be less than the WACC or negative,in both cases it will be rejected. $\begin{array}{lcccccc}\text { Year } & 0 & 1 & 2 & 3 & 4 & 5 \\ \text { Cash flows } & -\$ 1,250 & \$ 325 & \$ 325 & \$ 325 & \$ 325 & \$ 325\end{array}$

• A) 9.43%
• B) 9.91%
• C) 10.40%
• D) 10.92%
• E) 11.47%

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Definitions:

Variable Cost

Costs that change in proportion to changes in the level of production or sales volume.

Cost Volume Profit (CVP) Analysis

A financial analysis tool used to determine how changes in costs and volume affect a company's operating income and net income.

Simplified Model

An abstracted representation of a system that captures essential features while ignoring less relevant details to facilitate analysis and decision-making.

Activity-Based Costing

A pricing approach that discerns various tasks within a business and allocates the expenses of each activity to all goods and services based on their real usage.