The Internal Rate of Return Assumes That Funds Are Reinvested

question 88

Multiple Choice

The internal rate of return assumes that funds are reinvested at the

• A) cost of capital.
• B) yield on the investment.
• C) minimal acceptable rate to the corporation.
• D) yield to maturity.

---

Definitions:

Maturity Value

The total amount that will be paid to an investor at the end of a fixed income security's life, including principal and interest.

Interest-Bearing Note

A debt instrument that accrues interest over time, to be paid to the lender at maturity along with the principal amount.

Notes Receivable

Claims held by a company allowing it to receive payments from debtors, typically within a specified period and often accruing interest.

Maturity Value

The amount payable to an investor at the end of a debt instrument's holding period.