What Is the Approximate IRR for a Project That Costs

question 3

Multiple Choice

What is the approximate IRR for a project that costs $100,000 and provides cash inflows of $30,000 for six years?

• A)19.9 percent
• B)30.0 percent
• C)32.3 percent
• D)80.0 percent

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Definitions:

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, essentially the test's ability to detect an effect when there is one.

Null Hypothesis

A hypothesis used in statistical testing that assumes there is no significant difference or effect and that the observed outcomes are due to chance.

Rejecting

In statistical hypothesis testing, the act of concluding that there is enough evidence to discard the null hypothesis in favor of the alternative hypothesis.

T-Test Statistic

A type of inferential statistic used to determine if there is a significant difference between the means of two groups, which may be related in certain features.