A Project Has an Initial Outlay of $4,000

question 58

Multiple Choice

A project has an initial outlay of $4,000. It has a single payoff at the end of Year 4 of $6,996.46. What is the IRR for the project (round to the nearest percent) ?

• A) 16%
• B) 13%
• C) 21%
• D) 15%

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with quickly convertible assets.

Financial Statements

Records that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Accounts Receivable Turnover

A ratio that measures how many times a business collects its average accounts receivable balance in a period.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, listing assets, liabilities, and equity.