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.

---

Definitions:

Equipment

Tangible personal property used in operations, such as machinery or office hardware, that is not intended for sale.

Acquisition Differential

The difference between the cost of an acquisition and the fair value of net assets acquired, often recognized as goodwill on the balance sheet.

Patents

Legal rights granted by a government to an inventor for a limited time, giving exclusive rights to manufacture, use, or sell an invention.

Acquisition Differential

The difference between the purchase price of an acquired company and the book value of its net assets.