A Project Manager Is Using the Internal Rate of Return

question 37

Multiple Choice

A project manager is using the internal rate of return method to make the final decision on which project to undertake.Which of these four projects has the highest internal rate of return?

• A)$100,000 initial outlay with $10,000 cash inflows during the first two years,$20,000 during the third and fourth years,and $30,000 during the fifth year
• B)$100,000 initial outlay with a $5,000 cash inflow during the first year,$15,000 cash inflow during the second year,and $25,000 cash inflows during years three through five
• C)$75,000 initial outlay with a $5,000 cash inflow during the first year,increasing by $5,000 per year through the fifth year
• D)$50,000 initial outlay with $5,000 cash inflows during the first two years,$15,000 during the third and fourth years,and $20,000 during the fifth year

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Definitions:

Ordinary Bailment

A legal relationship where one party (the bailor) transfers physical possession of personal property to another party (the bailee) for a specific purpose, without transferring ownership.

Rights and Liabilities

Legal entitlements and obligations that individuals or entities possess in a legal agreement or under the law.

Party

An individual or entity involved in a legal agreement or dispute.

Ordinary Bailment

A legal relationship where physical possession of personal property is transferred from one person to another, but ownership is not.