A Project Manager Is Using the Internal Rate of Return

question 37

Multiple Choice

A project manager is using the internal rate of return method to make the final decision on which project to undertake.Which of these four projects has the highest internal rate of return?

• A)$100,000 initial outlay with $10,000 cash inflows during the first two years,$20,000 during the third and fourth years,and $30,000 during the fifth year
• B)$100,000 initial outlay with a $5,000 cash inflow during the first year,$15,000 cash inflow during the second year,and $25,000 cash inflows during years three through five
• C)$75,000 initial outlay with a $5,000 cash inflow during the first year,increasing by $5,000 per year through the fifth year
• D)$50,000 initial outlay with $5,000 cash inflows during the first two years,$15,000 during the third and fourth years,and $20,000 during the fifth year

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Definitions:

IACs

Industrialized Advanced Countries, a term sometimes used to refer to economically developed countries with high levels of industrialization.

Microcredit

Anti-poverty programs that lend small amounts of money to poor entrepreneurs.

Entrepreneurs

Individuals who create, organize, and manage a new business venture, taking on financial risks to do so.

Infrastructure

The basic physical and organizational structures needed for the operation of a society or enterprise, such as roads, bridges, water supply, and electric grids.