Meyer,Incis Considering a Very Risky Five-Year Project That Has an Initial

question 98

Multiple Choice

Meyer,Inc.is considering a very risky five-year project that has an initial outlay or cost of $70,000.The future cash inflows from its project for years 1,2,3,4,and 5 are all the same at $35,000.Meyer uses the internal rate of return method to evaluate projects.Will Meyer accept the project if its hurdle rate is 41.00%?

• A)Meyer will probably reject this project because its IRR is about 39.74%,which is slightly below its hurdle rate.
• B)Meyer will probably accept this project because its IRR is about 41.04%,which is slightly above its hurdle rate.
• C)Meyer will accept this project because its IRR is about 41.50%.
• D)Meyer will accept this project because its IRR is over 45.50%.

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Definitions:

Photoreceptors

Specialized cells located in the retina of the eye that are sensitive to light, enabling vision.

Vertebrate Eye

The complex optical organ in vertebrates that enables vision by detecting light and converting it into electro-chemical impulses in neurons.

Layer

A sheet, coat, or level of material, often one of several, that lies over or under another.

Action Potentials

Rapid, temporary changes in the electrical membrane potential that propagate along the membrane of a neuron or muscle cell, facilitating the transmission of signals.