What Is the Rate at Which the Net Present Value

question 29

Multiple Choice

What is the rate at which the net present value of an investment equals zero?

• A) Internal rate of return (IRR)
• B) Return on investment (ROI)
• C) Cash flow analysis
• D) Break-even analysis

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Definitions:

Depreciation

A technique for distributing the expense of a physical asset throughout its period of usability.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from revenue, indicating the company's profitability.

Operating Cash Flows

Cash generated from a company's normal business operations, indicating its ability to generate enough cash to maintain or expand operations.

Sunk Cost

Expenses that have been paid and cannot be retrieved, and therefore, should not impact upcoming business strategies.