Compute the IRR Statistic for Project X and Note Whether

question 42

Multiple Choice

Compute the IRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. $$\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash flow: } & - 75 & - 75 & 0 & 100 & 75 & 50 \\\hline\end{array}$$

• A)10 percent, accept
• B)10 percent, reject
• C)13.26 percent, accept
• D)13.26 percent, reject

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Definitions:

Perpetual System

An inventory system that continuously updates the balance of inventory after each purchase or sale.

Average Cost Formula

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, essentially the net value obtainable.

Inventory

The goods and materials a business holds for the ultimate purpose of resale, comprising raw materials, work-in-progress products, and finished goods.