The Internal Rate of Return (IRR) and the Net Present

question 5

Multiple Choice

The internal rate of return (IRR) and the net present value (NPV) are tools that are widely used in real estate investment and finance decision making. An investor would most likely pursue an investment if which of the following circumstances was true?

• A) The going-in IRR exceeds the investor's required rate of return
• B) The going-in IRR is less than the investor's required rate of return
• C) The going-in IRR exceeds the NPV
• D) The going-in IRR is less than the NPV

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Definitions:

T Statistic Value

A value derived from a T-test used to determine if there is a significant difference between the means of two groups.

Degrees Of Freedom

The number of independent values or quantities that can vary in the analysis without breaking any constraints.

Obtained Value

The actual value measured or calculated from a statistical test, which is compared against the critical value to draw conclusions.

Test Computation

The process of calculating results from test data, often using statistical methods to analyze the data.