Use the Information for the Question(s) Below

question 20

Multiple Choice

Use the information for the question(s) below.
Boulderado has come up with a new composite snowboard. Development will take Boulderado four years and cost $250,000 per year, with the first of the four equal investments payable today upon acceptance of the project. Once in production the snowboard is expected to produce annual cash flows of $200,000 each year for 10 years. Boulderado's discount rate is 10%.
-Calculate the IRR for the snow board project and use it to determine he maximum deviation allowable in the cost of capital estimate that leaves the investment decision unchanged.The maximum deviation allowable is closest to:

• A) 11.0%
• B) 0.0%
• C) 2.5%
• D) 1.0%

---

Definitions:

Sigma Bond

A type of covalent bond formed by the head-on overlap of atomic orbitals, involving two electrons shared between two atoms.

Atomic Orbital

A mathematical function describing the wave-like behavior of an electron in an atom. These functions define regions in an atom where electrons are most likely to be found.

Carbon

A chemical element with symbol C and atomic number 6, which is the basis of all known life on Earth and a component of many chemical compounds.

Oxygen

A chemical element (O) with atomic number 8, essential for respiration in most living organisms and a key component of water and most organic compounds.