The Internal Rate of Return Is Most Reliable When Evaluating

question 81

Multiple Choice

The internal rate of return is most reliable when evaluating:

• A) a single project with alternating cash inflows and outflows over several years.
• B) mutually exclusive projects of differing sizes.
• C) a single project with only cash inflows following the initial cash outflow.
• D) a single project with cash outflows at time 0 and the final year and inflows in all other time periods.

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Definitions:

Monetarists

Economists who believe that variations in the money supply are the main source of economic fluctuations.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in GDP, real income, employment, industrial production, and wholesale-retail sales.

Monetarists

Economists who posit that variability in the money supply critically impacts the short-term national economic output and the price level over longer spans.

Money Supply

This refers to the total amount of money (including cash, coins, and balances in bank accounts) in circulation within an economy at a given time.