What Is the IRR of a Project That Costs $100,000

question 11

Multiple Choice

What is the IRR of a project that costs $100,000 and provides cash inflows of $17,000 annually for 6 years?

• A) 0.57%
• B) 1.21%
• C) 5.69%
• D) 12.10%

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Definitions:

Annual Depreciation

The process of allocating the cost of a tangible asset over its useful life on a yearly basis.

Useful Service Life

The estimated period over which a fixed asset is expected to be usable by the company.

Straight-line Method

A depreciation method that allocates an equal amount of depreciation each year over the useful life of an asset.

Depreciable Assets

Assets whose cost is allocated over their useful lives due to usage, wear and tear, or obsolescence.