The Internal Rate of Return (IRR) for a Project Can

question 58

Multiple Choice

The internal rate of return (IRR) for a project can be determined

• A) If the IRR is greater than the firm's cost of capital.
• B) Only if the project's cash flows are constant.
• C) By finding the discount rate that yields a net present value (NPV) of zero for the project.
• D) By subtracting the firm's cost of capital from the project's profitability index.
• E) Only if the project's profitability index is greater than one.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Partial Billings

The process of issuing invoices for a fraction of the total amount of a contract or project before its completion.

Gross Profit

The difference between sales revenue and the cost of goods sold (COGS), indicating the profit made before deducting operating expenses.

Construction Costs

Expenses related directly to the construction of a building or infrastructure project, including materials, labor, and overhead.