The Internal Rate of Return on an Asset Can Be

question 8

Multiple Choice

The internal rate of return on an asset can be calculated:

• A) if the return is greater than the hurdle rate.
• B) if the asset's cash flows are identical to the future value of a series of cash flows.
• C) if the future value of a series of cash flows can be arrived at by the annuity accumulation factor.
• D) by finding a discount rate that yields a zero net present value.
• E) by finding a discount rate that yields a positive net present value.

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Definitions:

Tax Base

The total amount of assets or income that can be taxed by a government, forming the foundation of its revenue.

Progressive Tax

A tax system in which the tax rate increases as the taxable income increases, placing a larger financial burden on wealthier individuals.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, often increasing as income rises.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, showing the share of income paid in taxes.