Moepro,Inc

question 6

Multiple Choice

Moepro,Inc.is considering a five-year project that has an initial outlay or cost of $120,000.The respective future cash inflows from its project for years 1,2,3,4 and 5 are: $55,000,$45,000,$35,000,$25,000,and $15,000.Moepro uses the internal rate of return method to evaluate projects.What is the project's IRR?

• A)The IRR is less than 22.50%.
• B)The IRR is about 19.16%.
• C)The IRR is about 17.86%.
• D)The IRR is over 25.50%.

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Definitions:

Fixed Costs

Static expenses that are independent of production or sales volumes, including costs like rental fees, salary payments, and insurance.

Selling Prices

The amount a customer pays to purchase a product or service from a seller.

Variable Costs

Expenses that vary with the amount of output or sales.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent or salaries.