The Internal Rate of Return (IRR) for an Investment

question 7

Multiple Choice

The internal rate of return (IRR) for an investment:

• A) Frequently results in positive net present value (NPV) on attractive projects.
• B) Generally coincides with the company's discount rate.
• C) Disregards discounted cash flows.
• D) On mutually exclusive projects may produce different project rankings than those produced by using the net present value (NPV) method.
• E) Would tend to be reduced if a company used an accelerated method of depreciation for tax purposes rather than the straight-line (SL) method.

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Definitions:

Market Control

The ability of a single entity or a few entities to significantly influence the conditions or terms in a particular market.

Input Standards

Pre-defined criteria or benchmarks used to measure the quality, quantity, or timeliness of inputs in a production or manufacturing process.

Output Standards

Benchmarks set to measure the quantity, quality, or performance of a product or service produced.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to a normal good.