Use the Following Information to Answer the Question(s)below

question 66

Multiple Choice

Use the following information to answer the question(s) below.
You are considering investing in a start-up project at a cost of $100,000.You expect the project to return $500,000 to you in seven years.Given the risk of this project,your cost of capital is 20%.
-The IRR for this project is closest to:

• A)15.60%.
• B)18.95%.
• C)20.00%.
• D)25.85%.

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Definitions:

Inventory Holding Cost

Expenses associated with storing unsold goods, including warehousing, insurance, taxes, depreciation, and opportunity costs of capital tied up in inventory.

Marginal Subcontracting Cost

The extra expense associated with outsourcing an additional unit of production or service.

Layoff Cost

The financial impact associated with the termination of employees traditionally as a result of downsizing, restructuring, or automation.

Hiring And Training Cost

Expenses incurred in recruiting, hiring, and training new employees.