Frazier Fudge Has a Project with an Initial Outlay of $40,000,followed

question 75

Multiple Choice

Frazier Fudge has a project with an initial outlay of $40,000,followed by three years of annual incremental cash flows of $35,000.At the end of the third year,equipment will be sold producing additional cash flow of $10,000.Assuming a discount rate of 10%,which of the following is the correct equation to solve for the IRR of the project?

• A)$40,000 = $35,000(1.12)¹ + $35,000(1.12)² + $45,000(1.12)³
• B)$40,000 = $35,000(1 + IRR)¹ + $35,000(1 + IRR)² + $45,000(1 + IRR)³
• C)$40,000 = $35,000/(1.12)^IRR + $35,000/(1.12)^IRR + $45,000/(1.12)^IRR
• D)$40,000 = $35,000/(1 + IRR)+ $35,000/(1.IRR)+ $45,000/(1 + IRR)

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Definitions:

Humanistic

A psychological perspective focusing on individual potential and stress on the importance of growth and self-actualization.

Environment

The setting or situation in which a human, animal, or vegetation dwells or carries out their activities.

Placebo Effect

A positive outcome resulting from a placebo drug or treatment, not due to the placebo's actual characteristics, but instead stemming from the patient's faith in the treatment.

Transference Effect

A phenomenon in psychotherapy where a patient redirects feelings and desires, especially those unconsciously retained from childhood, onto the therapist.