The Director of Capital Budgeting of South Park Development Corporation

question 77

Multiple Choice

The director of capital budgeting of South Park Development Corporation is evaluating a project that will cost $200,000;it is expected to last for 10 years and produce after-tax cash flows,including depreciation,of $44,503 per year.If the firm's cost of capital is 14% and its tax rate is 40%,what is the project's IRR?

• A)8%
• B)14%
• C)18%
• D)-5%

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Definitions:

Twenty-sixth Amendment

An amendment to the United States Constitution that lowered the voting age from 21 to 18 years, ratified in 1971.

Federalists

Advocates for a strong federal government, dominating American politics in the late 18th century, known for supporting the ratification of the U.S. Constitution.

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A form of governance where the power lies directly in the hands of the people, typically exercised through voting and participation in policy-making.

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