Project M Requires an Initial Investment of $25 Million

question 53

Multiple Choice

Project M requires an initial investment of $25 million. The project is expected to generate $2.25 million in after-tax cash flow each year forever. Calculate the IRR for the project.

• A)10 percent
• B)9 percent
• C)8 percent
• D)7 percent

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Definitions:

Expenses

Economic costs that a business incurs through its operations to earn revenue.

Trial Balance

A bookkeeping report that lists the balances in each general ledger account at a specific point in time, used to check the accuracy of bookkeeping entries.

Debit Column

The side of an accounting ledger where increases in assets, expenses, and withdrawals are recorded.

Credit Column

is a section in financial statements or ledgers where increases in liability, equity, and revenue accounts or decreases in asset and expense accounts are recorded.