Flynn,IncIs Considering a Four-Year Project That Has an Initial Outlay

question 46

Multiple Choice

Flynn,Inc.is considering a four-year project that has an initial outlay or cost of $80,000.The future cash inflows from its project are $40,000,$40,000,$30,000,and $30,000 for years 1,2,3 and 4,respectively.Flynn uses the internal rate of return method to evaluate projects.What is the approximate IRR for this project?

• A)The IRR is less than 12%.
• B)The IRR is between 12% and 20%.
• C)The IRR is about 24.55%.
• D)The IRR is about 28.89%.

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Definitions:

Borrowing

The act of receiving funds from another party with the agreement to repay the principal amount along with any agreed-upon interest or fees.

Contest

A competition or challenge, often with rules and participants aiming to win or achieve a specific outcome.

Earn

To receive income or compensation in exchange for work or through investments.

Rate Of Interest

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.