Without Using Formulas, Provide a Definition of Internal Rate of Return

question 263

Multiple Choice

Without using formulas, provide a definition of internal rate of return (IRR) .

• A) The rate of return provided by a project. The value is compared with a company's rate of return to determine viability of a project.
• B) A situation whereby a choice has to be made between two or more projects, and choosing multiple projects is not an option.
• C) A graphical representation of the relationship between varying rates of return and the corresponding NPV value.
• D) A project analysis tool that measures the acceptability of a project through the difference between a project's initial investment and whether the present value of its cash flow will repay the investment.
• E) A project analysis tool that measures the acceptability of a project by determining the amount of profit that can be expected based on an investment made.

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Definitions:

ANOVA Design

A statistical method and design of experiments aimed at comparing the means of three or more groups to understand if at least one group mean differs significantly.

Interaction

In statistics and research, the mutual or reciprocal actions or influence between variables or factors.

Complete Factorial Experiment

An experimental design in which each possible combination of variables and levels is tested.

Replicates

Repeated measurements or experiments conducted under identical conditions to estimate variability or to ensure reliability.