Which of the Following Statements Is True of the Internal

question 58

Multiple Choice

Which of the following statements is true of the internal rate of return?

• A) It is the required rate of return to achieve value maximization.
• B) It is the discount rate that equates the present value of the cash outflows (or costs) with the present value of the cash inflows.
• C) It is the discount rate at which the net present value of a project is minimum.
• D) It is the rate of return at which a project's payback period is shortest.
• E) It is the discount rate to be used for a project with multiple cash outflows.

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Definitions:

Government Involvement

The role played by a government in regulating and participating in economic activities, including implementing policies that affect the economy.

Federal Spending

Expenditures by the federal government on various programs, infrastructure, and services, financed by taxes and other revenues.

Payroll Tax

Obligations enforced on either the workforce or the employers, generally estimated as a share of the compensation employers offer to their staff.

Proportional Taxes

Taxes that are imposed at a constant rate regardless of the income level of the taxpayer.