When Using the Internal Rate of Return (IRR)investment Rule,we Compare

question 54

Multiple Choice

When using the internal rate of return (IRR) investment rule,we compare:

• A)the average return on the investment opportunity to returns on all other investment opportunities in the market.
• B)the average return on the investment opportunity to returns on other alternatives in the market with equivalent risk and maturity.
• C)the NPV of the investment opportunity to the average return on the investment opportunity.
• D)the average return on the investment opportunity to the risk-free rate of return.

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Definitions:

Decimal Places

The count of numerals found after the decimal point in a number that signifies its level of accuracy.

Percentage

A portion or share of a whole, expressed as a number out of 100.

Rate of Decrease

A measure that indicates how quickly a quantity diminishes over time.

Base Value

A reference point used in the calculation of variables, such as index numbers, from a specific base date.