The Internal Rate of Return Is Computed by Finding the Discount

question 391

True/False

The internal rate of return is computed by finding the discount rate that equates the present value of a project's cash outflows with the present value of its cash inflows.

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Contributed Capital

Funds raised by a company in exchange for its shares, representing the equity capital contributed by the shareholders.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period, and must be paid out before common shareholders can receive dividends.

Noncumulative Preferred Stock

A type of preferred stock where dividends are not accumulated if they are not declared.