Quasar Company Is Evaluating an Investment That Will Cost $520,000

question 86

Multiple Choice

Quasar Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Please use the tables below and determine the internal rate of return. Please choose the percentage below that comes closest to the actual IRR.

• A)7%
• B)8%
• C)9%
• D)10%

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Definitions:

Left-hand Generator Rule

A rule that predicts the direction of induced current flow in a generator's conductor moving perpendicular to a magnetic field, using the left hand to demonstrate orientation.

Inductors

Electrical components that store energy in a magnetic field when electric current flows through them, typically used in filters and chokes.

Inductance

The property of an electrical conductor that causes it to oppose a change in the current flowing through it, stored in the magnetic field created by the current.

Henry

The SI unit of inductance, defined as the inductance in a circuit when an electromotive force of one volt is produced by a current changing at one ampere per second.