Modern Federal Bank Is Setting Up a Brand-New Branch

question 83

Multiple Choice

Modern Federal Bank is setting up a brand-new branch. The cost of the project will be $1.2 million. The branch will create additional cash flows of $235,000, $412,300, $665,000 and $875,000 over the next four years. The firm's cost of capital is 12 percent. What is the internal rate of return on this branch expansion? (Do not round intermediate computations. Round final answer to the nearest percent.)

• A) 20%
• B) 23%
• C) 25%
• D) 27%

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Definitions:

Authority Structure

The way in which power and authority are distributed and exercised within an organization or society.

Artificial

Something made or produced by human beings rather than occurring naturally, typically as a copy of something natural.

Obey

To follow the directives or commands of someone with authority or a set of rules or laws.

Social Category

A grouping of people based on shared characteristics or attributes, which may not necessarily lead to social interaction or shared identity.