What Is the Approximate Internal Rate of Return of a Project

question 55

Multiple Choice

What is the approximate internal rate of return of a project with a cost of $100 000 that generates cash flows of $40 000 over the next three years?

• A)2%
• B)5%
• C)9%
• D)10%

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Definitions:

Recoverable Amount

The higher of an asset's fair value less costs of disposal and its value in use, reflecting the estimated amount that can be realized from the asset.

Carrying Value

The book value of an asset on a company’s balance sheet, calculated as the original cost minus accumulated depreciation or amortization.

Equity Method

An accounting method used to assess the investments in associate companies where the investor has significant influence but does not control the company outright.

Consolidation Process

The method of combining the financial statements of a parent company with those of its subsidiaries to present as one entity.