Blue Bird Café Is Considering a Project with an Initial

question 57

Multiple Choice

Blue Bird Café is considering a project with an initial cost of $46,800,and cash flows of $8,500,$25,000,$19,000,and −$4,500 for Years 1 to 4,respectively.How many internal rates of return do you expect this project to have?

• A)0
• B)1
• C)4
• D)3
• E)2

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Definitions:

Common Stock Dividends

Payments made to shareholders of common stock, usually in the form of cash or additional shares, from the company's earnings.

Accrual Basis

Accrual basis accounting is a method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid, as opposed to when they are incurred.

Accounts Receivable

Amounts due from customers to a business for delivered or utilized goods or services awaiting payment.