Alcan,Incis Considering a Project That Has an Initial Outlay or Cost

question 47

Multiple Choice

Alcan,Inc.is considering a project that has an initial outlay or cost of $220,000.The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000,$60,000,$70,000,and $80,000,respectively.Alcan uses the internal rate of return method to evaluate projects.Will Alcan accept the project if its hurdle rate is 12%?

• A)Alcan will not accept this project because its IRR is about 9.74%.
• B)Alcan will not accept this project because its IRR is about 7.63%.
• C)Alcan will not accept this project because its IRR is about 6.50%.
• D)Alcan will not accept this project because its IRR is about 4.66%.

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Definitions:

Ethmoid Sinuses

Air-filled spaces located between the nose and the eyes that are part of the paranasal sinus system.

Turbinates

Long, narrow bones covered in soft tissue within the nasal cavity that help warm, moisten, and filter the air we breathe.

Kiesselbach Plexus

A network of blood vessels located in the anterior part of the nasal septum, a common site of nosebleeds.

Rheumatic Fever

An inflammatory disease that can develop as a complication of inadequately treated strep throat or scarlet fever, affecting the heart, joints, skin, and brain.