Internal Rate of Return: Modern Federal Bank Is Setting Up

question 33

Multiple Choice

Internal rate of return: 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? (Round to the nearest percent.)

• A) 20%
• B) 23%
• C) 25%
• D) 27%

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Definitions:

Key Performance Indicators

Quantifiable measures used to gauge the performance of a company, project, or campaign against predefined objectives.

Defined Objectives

Specific, measurable goals set by a business or individual to guide activities and assess performance.

Measurement Maps

Tools or methods used to visually represent and assess quantitative data or metrics.

Frequency

The number of occurrences of a repeating event per unit of time.