The Internal Rate of Return Is That Discount Rate That

question 15

True/False

The internal rate of return is that discount rate that equates the present value of the cash outflows (or costs) with the present value of the cash inflows.

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Definitions:

Annuity Due

A type of annuity payment where payments are made at the beginning of each period instead of the end.

Growing Perpetuity

A series of cash flows that grow at a consistent rate indefinitely.

Growing Annuity

A series of periodic payments that grow at a constant rate and are received for a finite number of periods.

Perpetuity

A type of annuity that pays a fixed amount of money to an investor at regular intervals indefinitely.