Kiley Electronics Is Considering a Project That Has the Following $\begin{array}{lcccc}\text { Year } & 0 & 1 & 2 & 3 \\ \text { Cash flows } & -\$ 1,100 & \$ 450 & \$ 470 & \$ 490\end{array}$

question 61

Multiple Choice

Kiley Electronics 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 (and even negative) ,in which case it will be rejected. $\begin{array}{lcccc}\text { Year } & 0 & 1 & 2 & 3 \\ \text { Cash flows } & -\$ 1,100 & \$ 450 & \$ 470 & \$ 490\end{array}$

• A) 9.70%
• B) 10.78%
• C) 11.98%
• D) 13.31%
• E) 14.64%

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, unrelated to market value.

Premium

An amount paid in excess of the nominal or face value, often in relation to insurance or bonds.

Tax Deductible

Expenses or payments that can be subtracted from gross income to reduce the amount of income subject to taxation.

Term Bonds

Bonds that have a fixed maturity date on which the principal amount is due to be paid back to investors in full.