The Following Data Are Available on a Proposed Investment Project

question 55

Multiple Choice

The following data are available on a proposed investment project: $\begin{array} { l r } \text { Initial Investment } & \$ 142,500 \\\text { Annual Cash Inflows } & \$ 30,000 \\\text { Life of the Investment. } & 8 \text { years } \\\text { Required Rate of Return } & 10 \%\end{array}$ Which of the following statements best describes the internal rate of return on the proposed investment project? (Ignore income taxes in this problem.)

• A) It is between 11% and 12%.
• B) It is between 12% and 13%.
• C) It is between 13% and 14%.
• D) It is less than the required rate of return.

---

Definitions:

Perfect Competitor

A theoretical market structure where many firms sell identical products, and no single seller can influence the market price.

Perfect Competition

A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to efficient outcomes.

Marginal Revenue

The rise in earnings associated with the sale of one more unit of output.

Total Revenue Curve

A graphical representation showing how total revenue changes as the amount of goods sold varies.