The Following Data Are Available on a Proposed Investment Project

question 20

Multiple Choice

The following data are available on a proposed investment project:
$\begin{array}{|l|r|}\hline \text { Initial investment } & \$ 142,500 \\\hline \text { Annual Cash Inflows } & \$ 30,000 \\\hline \text { Life of the investment } & 8 \text { years } \\\hline\end{array}$
$$\begin{array} { | l | l |} \hline \text { Required Rate of Return } & 10 \%\\\hline\end{array}$$
Which of the following statements best describes the internal rate of return on the proposed investment project? (Ignore income taxes in this problem.)

• A) It is between 11% and 12%.
• B) It is between 12% and 13%.
• C) It is between 13% and 14%.
• D) It is less than the required rate of return.

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Definitions:

Montana

A state located in the Western United States, known for its vast wilderness areas and Rocky Mountain landscapes.

Articles of Incorporation

A document that establishes the existence of a corporation in the United States and includes basic information like the corporation's name, type of corporation, and the nature of the business.

State Incorporation Statutes

Laws governing the process by which companies are recognized as legal entities under the state's jurisdiction.

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and possibly the right to vote on corporate matters.