A Capital Budgeting Project Has a Net Investment of $1,000,000

question 18

Multiple Choice

A capital budgeting project has a net investment of $1,000,000 and is expected to generate net cash flows of $350,000 annually for 4 years. What is the internal rate of return?

• A)22.11%
• B)14.96%
• C)2.48%
• D)26.43%

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Definitions:

Shortages

Occur when the demand for a good or service exceeds its supply in a given market, often leading to price increases.

Allocative Efficiency

Occurs when resources are distributed in a way that maximizes the net benefit to society.

Least Costly Way

Refers to a method or strategy that aims to achieve a particular goal or produce a specific outcome with the minimum possible expense or use of resources.