What is internal rate of return

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Reference no: EM131867876

1. Franchising, Inc. is considering a major investment. The investment will have an initial cost of $728,000. The cash inflows generated by the project are estimated at $134,000 for the first two years and $127,000 for the following 7 years. What is the internal rate of return? Please show work

a. 10.45 percent

b. 10.54 percent

c. 10.61 percent

d. 10.72 percent

e. 10.86 percent

2. Q Corp has decided to pay out an extra $1 million to shareholder, while keeping investment policy and capital structure constant. Which statement is false?

A. Q Corp must issue $1 million of stock to replace the lost cash.

B. the new shareholders will demand to receive shares worth $1 million.

C. the old shareholders will have reduced their stake in the firm by $1 million.

D. the reduced stake that old shareholders have in the firm will more than offset the benefit of the higher dividend.

Reference no: EM131867876

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