The Rate That Yields a Net Present Value of Zero

question 31

Multiple Choice

The rate that yields a net present value of zero for an investment is the:

• A) Internal rate of return.
• B) Accounting rate of return.
• C) Net present value rate of return.
• D) Zero rate of return.
• E) Payback rate of return.

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Definitions:

Operating Activities

Activities directly related to the operation of the business, including production, sales, and day-to-day business management.

FASB

The Financial Accounting Standards Board is an independent organization responsible for establishing and improving financial accounting and reporting standards in the United States.

Cost-Benefit Constraint

An accounting principle that suggests weighing the cost of providing financial information against the potential benefit that information offers to users.

Cash Paid

The amount of money disbursed by a business for various purposes, including operating expenses, investments, and financing activities.