A Project That Provides Annual Cash Flows of $12,600 for 12

question 35

Multiple Choice

A project that provides annual cash flows of $12,600 for 12 years costs $67,150 today. At what rate would you be indifferent between accepting the project and rejecting it?

• A)15.28 percent
• B)15.40 percent
• C)15.51 percent
• D)15.62 percent
• E)15.74 percent

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Definitions:

Decreasing Returns

A situation in which the addition of more units of input results in the less-than-proportional increase in output.

High Levels

Refers to quantities or amounts that are considerably above the average or typical range.

Output

The amount of products or services generated by a company, sector, or economic system within a specific timeframe.

Constant Returns

Refers to a situation in production where increasing the inputs by a certain factor results in output increasing by the same factor.