Without Using Formulas, Provide a Definition of Internal Rate of Return

question 252

Multiple Choice

Without using formulas, provide a definition of internal rate of return (IRR) .

• A) The rate of return provided by a project. The value is compared with a company's rate of return to determine viability of a project.
• B) A situation whereby a choice has to be made between two or more projects, and choosing multiple projects is not an option.
• C) A graphical representation of the relationship between varying rates of return and the corresponding NPV value.
• D) A project analysis tool that measures the acceptability of a project through the difference between a project's initial investment and whether the present value of its cash flow will
• Repay the investment.
• E) A project analysis tool that measures the acceptability of a project by determining the amount of profit that can be expected based on an investment made.

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Definitions:

Cessation

The process of ending or being brought to an end.

Breathing

The process of inhaling oxygen and exhaling carbon dioxide from the atmosphere.

Epiglottis

A flap of cartilage located at the root of the tongue, which is depressed during swallowing to cover the opening of the windpipe.

Trachea

The windpipe, a large airway that leads air in and out of the lungs.