Examlex
Which of the following is the last step of the three-component approach to managing policy risk?
Cost of Capital
The rate of return that a company needs to earn on its investment projects to maintain its market value and satisfy its investors and creditors.
Internal Rate of Return
The discount rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.
Multiple IRRs
The situation where a project has more than one internal rate of return, occurring due to unconventional cash flows.
Reinvestment Assumption
The theory that cash flows will be reinvested at a constant rate, often used in financial modeling.
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