The Cash Inflows Expected During a Project's Life Are Equal

question 71

Multiple Choice

The cash inflows expected during a project's life are equal in amount.In determining the internal rate of return, how is the present value factor calculated?

• A)By dividing the initial outlay by the annuity amount
• B)By multiplying the annuity amount by the number of years it occurs
• C)By looking in the present value of an annuity table for the number of years and the respective discount rate
• D)By dividing the present value of the annuity by the initial outlay

---

Definitions:

Coupon Rate

The interest rate on a bond, which is calculated as a percentage of the face value, and paid to the bondholders periodically until maturity.

Par Value

It represents the nominal or face value of a security, such as a share or bond, and is the minimum price at which such securities might be issued originally.

Collateralized Bonds

Bonds that are secured by a collateral asset, providing higher security to bondholders in case of issuer's default.

Issuing Firm

A company or entity that releases securities into the financial market for the first time, often through initial public offerings (IPOs) or bond sales.