Miller Brothers Is Considering a Project That Will Produce Cash

question 14

Multiple Choice

Miller Brothers is considering a project that will produce cash inflows of $61,500,$72,800,$84,600,and $68,000 a year for the next four years,respectively.What is the internal rate of return if the initial cost of the project is $225,000?

• A)9.39 percent
• B)10.22 percent
• C)11.47 percent
• D)11.62 percent
• E)12.24 percent

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Definitions:

Allocative Efficiency

An economic state where resources are allocated in a way that maximizes the net benefit to society, considering both production and desires of consumers.

Simultaneous Consumption

A consumption pattern in which a product or service is consumed by multiple users at the same time without reducing its availability to others.

Economies of Scale

The financial benefits companies experience from expanding their operation's size, where there's a general trend of decreasing unit costs with the growth in scale.