Use the Information for the Question(s)below

question 37

Multiple Choice

Use the information for the question(s) below.
The Sisyphean Company is planning on investing in a new project.This will involve the purchase of some new machinery costing $450,000.The Sisyphean Company expects cash inflows from this project as detailed below: The appropriate discount rate for this project is 16%.
-The IRR for this project is closest to:

• A)18.9%.
• B)22.7%.
• C)34.1%.
• D)39.1%.

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Definitions:

Absorption Costing

A cost accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Profit

The financial gain achieved when the revenue from business activities exceeds the expenses, costs, and taxes involved in maintaining the operation.

Standard Costs

Predetermined costs for products or services, used as benchmarks for evaluating actual performance and cost control.

Step-Down Method

An allocation method used in cost accounting to assign costs in a hierarchical manner, from the highest level down to the lowest.