The Discount Rate That Makes the Net Present Value of an Investment

question 297

Multiple Choice

The discount rate that makes the net present value of an investment exactly equal to zero is called the:

• A) External rate of return.
• B) Internal rate of return.
• C) Average accounting return.
• D) Profitability index.
• E) Equalizer.

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Definitions:

Assumptions

Beliefs or principles accepted as true without proof, often forming the basis for further reasoning or behavior.

Analogies

Cognitive processes that identify similarities between two different ideas or objects, facilitating understanding and problem-solving.

Natural Selection

The process by which biological traits become more or less common in a population due to consistent effects on the survival and reproduction of their bearers.

Evolutionary

Pertaining to the process of natural selection and adaptation over generations, affecting the development of biological species.