Glossimer Thread Company Is Evaluating an Investment That Will Cost

question 87

Multiple Choice

Glossimer Thread Company is evaluating an investment that will cost $760,000 and will yield cash inflows of $255,000 in the first year,$325,000 in the second year,and $380,000 in the third and the final year.Use the table below and determine the internal rate of return. Present value of $1:
$$\begin{array} { | c | c | c | c | c | c | } \hline & 8 \% & 9 \% & 10 \% & 11 \% & 12 \% \\\hline 1 & 0.926 & 0.917 & 0.909 & 0.901 & 0.893 \\\hline 2 & 0.857 & 0.842 & 0.826 & 0.812 & 0.797 \\\hline 3 & 0.794 & 0.772 & 0.751 & 0.731 & 0.712 \\\hline 4 & 0.735 & 0.708 & 0.683 & 0.659 & 0.636 \\\hline 5 & 0.681 & 0.65 & 0.621 & 0.593 & 0.567 \\\hline\end{array}$$ The IRR of the project will be ________.

• A) between 10% and 11%
• B) less than 11%
• C) less than 10%, more than 11%
• D) more than 11%

---

Definitions:

Mole

A basic unit of measure in chemistry that represents a quantity of chemical substance containing approximately 6.022 x 10^23 particles, atoms, molecules, ions or electrons.

Silver

A precious metal with the chemical symbol Ag and atomic number 47, known for its conductivity and antibacterial properties.

Mass

A property of physical matter which determines the strength of its mutual gravitational attraction to other bodies and its resistance to being accelerated by a force.

Moles

A unit of measure in chemistry representing a quantity of chemical substance that contains as many elementary entities (atoms, molecules, ions, etc.) as there are atoms in 12 grams of pure carbon-12.