A Project Is Profitable If Its Internal Rate of Return

question 1

Short Answer

A project is profitable if its internal rate of return: a. Exceeds its discount rate.
B) Is zero.
C) Exceeds cash outflows of the project.
D) Exceeds its opportunity cost of capital.
E) None of the above.

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Definitions:

Loans

Funds borrowed that are expected to be paid back with interest.

Required Reserves

The fraction of deposits that banks are obligated to hold in reserve and not lend out, as mandated by the central bank.

Reserve Requirement

The fraction of deposits that banks are required to hold in reserve and not lend out, which is used by central banks as a tool to control the money supply.

Deposits

Funds placed into an account at a banking institution for safekeeping and potential interest accrual.