Write the Word or Phrase That Best Completes Each Statement

question 438

Short Answer

Write the word or phrase that best completes each statement or answers the question.
-A venture capital firm invested $2,000,000 in a new company in 1995. In 1999, they sold their stake in the
company for $10,500,000. What was the average annual rate of return on their investment?

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Definitions:

Internal Rate

Often referred to as the Internal Rate of Return (IRR), it’s the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Investment Proposals

Formal plans or suggestions put forward for consideration or discussion, especially one concerning financial investment.

Capital Budgeting

The process of planning and evaluating investments in long-term assets, focusing on projects that will generate future profits.

Required Rate

Typically refers to the minimum return rate needed on an investment, considering risk and funding costs.