Tedder Mining has analyzed a proposed expansion project and determined that the

Question

Tedder Mining has analyzed a proposed expansion project and determined that the internal rate of return is lower than the firm desires. Which one of the following changes to the project would be most expected to increase the project's internal rate of return?
A. decreasing the required discount rate
B. increasing the initial investment in fixed assets
C. condensing the firm's cash inflows into fewer years without lowering the total amount of those inflows
D. eliminating the salvage value
E. decreasing the amount of the final cash inflow

Explanation / Answer

C. condensing the firm's cash inflows into fewer years without lowering the total amount of those inflows This would increase the projects internal rate of return

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