If the Internal Rate of Return Is Used as the Discount

question 100

Multiple Choice

If the internal rate of return is used as the discount rate in the net present value calcula-tion, the net present value will be

• A) zero.
• B) positive.
• C) negative.
• D) undeterminable.

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Definitions:

Cash Disbursements

Money being paid out by a company during a period, including expenses, debt payments, and purchase of assets, usually tracked through a cash disbursements journal.

Materials Purchases

The total cost of raw materials bought by a company for use in its manufacturing process during a specific period.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Production Budget

A financial plan that outlines the expected production levels of a company based on projected sales, inventory policies, and capacity constraints.