Asked by
MaryMay Lagud
on Oct 10, 2024
Verified
(Ignore income taxes in this problem.) Heap Corporation is considering an investment in a project that will have a two year life.The project will provide a 10% internal rate of return, and is expected to have a $40,000 cash inflow the first year and a $50,000 cash inflow in the second year.What investment is required in the project?
A) $74,340
B) $77,660
C) $81,810
D) $90,000
Internal Rate of Return
A measure of an investment's rate of return. It is the discount rate that makes the net present value of all cash flows from a particular project equal to zero.
Cash Inflow
Cash inflow, mentioned again, refers to the inflow of funds into a business from various activities, highlighting its importance in assessing a company’s financial health.
- Become familiar with the principles and calculation procedures of the Internal Rate of Return (IRR), and understand its utility in investment opportunity appraisal.
- Recognize the function of cash inflows and cash outflows in ascertaining the feasibility of a project.
Verified Answer
CG
Learning Objectives
- Become familiar with the principles and calculation procedures of the Internal Rate of Return (IRR), and understand its utility in investment opportunity appraisal.
- Recognize the function of cash inflows and cash outflows in ascertaining the feasibility of a project.