Which of the Following Statements Is False

question 1

Multiple Choice

Which of the following statements is false?

• A)The internal rate of return is the discount rate that results in a zero net present value for the project.
• B)The internal rate of return represents the rate of interest that results from the recovery of the investment outlay,plus a return on the investment project during its life.
• C)The internal rate of return represents the rate of interest that recovers the initial investment outlay.
• D)The internal rate of return is the discount rate that results in a zero net present value for the project.It also represents the rate of interest that results from the recovery of the investment outlay,plus a return on the investment project during its life.

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Definitions:

Worst Case Scenario

the most adverse condition or outcome that can reasonably be projected.

Base Case

The default scenario in scenario analysis, used as a benchmark to compare the outcomes of alternative assumptions or actions.

NPV

Net Present Value, a calculation used to assess the profitability of an investment by summing the present values of all expected future cash flows minus the initial investment cost.

Break-even Points

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.