You Require an Internal Rate of Return of 8% to Accept

question 14

Multiple Choice

You require an internal rate of return of 8% to accept a project. If the project will yield $10,000 per year for 10 years, what is the maximum amount that you would be willing to invest in the project?

• A) $51,400
• B) $67,100
• C) $100,000
• D) $144,870

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Definitions:

Gains from Trade

The increase in welfare or overall efficiency that arises from individuals or nations engaging in voluntary exchange or trade.

Increase in Total Output

A rise in the quantity of goods or services produced by an economy or firm.

Specialize

The focus on a narrow area of activity or field of study, which often leads to increased efficiency and effectiveness in producing goods or offering services.

Tasks

Specific pieces of work to be done, often as part of a broader project or job.