9. You are considering investing in a start-up project at a cost of $100,000. You expect the project to return $500,000 to you in seven years. Given the risk of this project, your cost of capital is 20%. The IRR for this project is closest to: A) 15.60%. B) 18.95%. C) 20.00%. D) 25.85%.

9. You are considering investing in a start-up project at a cost of $100,000. You expect the project to return $500,000 to you in seven years. Given the risk of this project, your cost of capital is 20%. The IRR for this project is closest to: A) 15.60%. B) 18.95%. C) 20.00%. D) 25.85%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

9. You are considering investing in a start-up project at a cost of $100,000. You expect the
project to return $500,000 to you in seven years. Given the risk of this project, your cost
of capital is 20%.
The IRR for this project is closest to:
A) 15.60%.
B) 18.95%.
C) 20.00%.
D) 25.85%.

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