Darrox,Inc

question 88

Multiple Choice

Darrox,Inc.is considering a four-year project that has an initial outlay or cost of $90,000.The future cash inflows from its project are $50,000,$30,000,$30,000,and $30,000 for years 1,2,3 and 4,respectively.Darrox uses the internal rate of return method to evaluate projects.What is the approximate IRR for this project?

• A)The IRR is less than 12%.
• B)The IRR is between 12% and 20%.
• C)The IRR is about 22.80%.
• D)The IRR is about 28.89%.

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Definitions:

Qualitative Characteristics

The attributes that make the information provided in financial statements useful to users, such as relevance and reliability.

Comparability

The quality that allows users to analyze trends in financial data across different time periods within a company or compare financial data across companies.

Understandability

Understandability in accounting means financial information should be presented clearly and concisely, making it easy for users to comprehend.

Conceptual Framework

An underlying structure in various fields that outlines principles and concepts for systematic study or analysis.