Use the Information Below to Answer the Following Question(s)

question 101

Multiple Choice

Use the information below to answer the following question(s) .Wet Water Company drills residential and commercial wells.The company is in the process of analyzing the purchase of a new drill.Information on the proposal is provided below:
Note: Other than the initial investment, cash flows are end of period.The working capital is returned at the end of the investment period.
-Soda Manufacturing Company provides vending machines for soft drink manufacturers.The company has been investigating a new piece of machinery for its production department.The old equipment has a remaining life of 1 year and no sales value.The new equipment has a value of $52,650 with a three-year life.The expected additional cash inflows are $25,000 per year, end of year payments.What is the internal rate of return?

• A)24 percent
• B)20 percent
• C)16 percent
• D)12 percent
• E)8 percent

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Definitions:

Inventory Turnover

A ratio indicating how many times a company's inventory is sold and replaced over a period, used to assess efficiency in managing and selling products.

Dividend Yield

An economic indicator revealing the yearly dividend payment of a company as a proportion of its share price.

Gross Margin Ratio

A profitability metric that measures the difference between revenue and the cost of goods sold (COGS), expressed as a percentage of revenue.

Return on Common Stockholders' Equity

A measure of the profitability that indicates how much profit a company generates with the money shareholders have invested.