Suppose You Have an Investment That Costs $80,000 at the Beginning

question 79

Multiple Choice

Suppose you have an investment that costs $80,000 at the beginning of the project,and it generates $30,000 a year for four years in positive cash flows.The cost of capital is 12%.The IRR of the project is 18.45% and the NPV is about $11,120.The IRR model assumes that at the end of the first year you can invest the $30,000 at ________.

• A)18.45%
• B)12.00%
• C)a rate less than the cost of capital
• D)a rate greater than the IRR

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Definitions:

Symmetric

Describes a shape or distribution that is mirrored and evenly balanced around a central point or axis.

Measures of Central Location

Statistical metrics that describe the center of a dataset, including mean, median, and mode.

Mean

The average of a set of values, calculated by summing them up and dividing by the number of values.

Data Set

A collection of data, often organized in a structured format, that can be analyzed to find patterns, trends, or to answer specific questions.