What Is the IRR of a Project That Requires an Investment

question 126

Multiple Choice

What is the IRR of a project that requires an investment of $9,900.39 today and will generate $1,500 per year for ten years and an additional $10,000 at the end of the tenth year?

• A) 8.37%
• B) 11.75%
• C) 14.43%
• D) 15.20%

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Definitions:

Target Costing

A pricing method that starts with a market-based price point and then deduces the allowable cost to maintain profitability.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated as a percentage of the investment's return relative to its cost.

Selling Price

The sum of money required for a product or service, which directly affects the income produced through sales.

Fixed Manufacturing Overhead

Fixed costs related to manufacturing that do not change with the level of production, such as factory rent and salaries of permanent staff.