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Subject P2: Advanced Management Accounting

10.5 C plc is evaluating a possible investment project with the following cash flows:
Initial Investment: $350,000
Incremental cash flows:

Year 1 $50,000
Year 2 $110,000
Year 3 $130,000
Year 4 $150,000

Year 5 $100,000

What is the IRR of the investment?

A 5%

B 10%

C 15%

D 20%

10.6 An individual placed a sum of money in the bank and left it there for 12 years at
5% per annum. The sum is now worth $1,705.56.

The original principal (to the nearest whole $) was:

A $948

B $949

C $950

D $951

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