What Will Happen to the Internal Rate of Return (IRR)of

question 207

Multiple Choice

What will happen to the internal rate of return (IRR) of a project if the discount rate is decreased from 9% to 7%?

• A)IRR will always increase.
• B)The discount rate change will not affect IRR.
• C)IRR will always decrease.
• D)We cannot determine the direction of the effect on IRR from the information provided.

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Definitions:

Experimental Method

A research methodology that systematically manipulates one variable to test its effect on another, allowing for controlled observations and conclusions about causality.

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Scientific Method

A method of procedure consisting in systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses.

Empirical Data

Information obtained through observation or experimentation, providing evidence that can be analyzed to support or refute hypotheses and theories.