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:

Military Joint

Refers to a joint operation or command where members from different services of the armed forces work together.

Chiefs Of Staff

Senior officials who lead the administrative and managerial functions of an organization, often within government or military.

Cold War

A period of geopolitical tension and ideological conflicts between the United States and the Soviet Union, from the late 1940s to the early 1990s.

Soviet Union

A former federal socialist state in northern Eurasia that existed from 1922 to 1991, officially known as the Union of Soviet Socialist Republics (USSR).