After a Long Drought, the Manager of Long Branch Farm

question 37

Multiple Choice

After a long drought, the manager of Long Branch Farm is considering the installation of an irrigation system which will cost $100,000. It is estimated that the irrigation system will increase revenues by $20,500 annually, although operating expenses other than depreciation will also increase by $5,000. The system will be depreciated using MACRS over its depreciable life (5 years) to a zero salvage value. If the tax rate on ordinary income is 40 percent, what is the project's IRR?

• A) 12.6%
• B) -1.3%
• C) 13.0%
• D) 10.2%
• E) -4.8%

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Definitions:

Adolescents

Individuals in the transition phase between childhood and adulthood, typically ranging from ages 13 to 19.

Genes

Basic units of heredity contained in the DNA of living organisms that act as instructions to manufacture proteins, determining physical and some behavioral traits.

Timing of Puberty

Refers to the period during which adolescents undergo physical and hormonal changes that lead to sexual maturity.

Precocious Puberty

A condition where a child's body begins changing into that of an adult (puberty) too soon, before the age of 8 in girls and 9 in boys.