A Project Costs $22,900 to Initiate

question 34

Multiple Choice

A project costs $22,900 to initiate.It is expected to provide cash flows of $15,900 in Year 1 and $9,900 in Year 2.In Year 3,it will cost the firm $5,500 to end the project.What is the modified IRR at a discount rate of 14 percent?

• A)-6.79%
• B)-6.67%
• C)10.63%
• D)11.08%
• E)14.00%

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Inventory

Refers to the goods and materials that a business holds for the ultimate goal of resale.

Government Securities

Financial instruments issued by the government to finance its expenditures, offering a relatively safe investment.

Money Market Accounts

Savings accounts that typically offer higher interest rates in exchange for larger deposit balances, with limited transaction privileges.