The Internal Rate of Return on an Asset Can Be

question 15

Multiple Choice

The internal rate of return on an asset can be calculated:

• A)if the return is greater than the hurdle rate.
• B)if the asset's cash flows are identical to the future value of a series of cash flows.
• C)if the future value of a series of cash flows can be arrived at by the annuity accumulation factor.
• D)by finding a discount rate that yields a zero net present value.
• E)by finding a discount rate that yields a positive net present valuE.

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Definitions:

Economic Profit

The surplus remaining when total revenue is greater than total cost, including both explicit and implicit costs, often indicating a company's profitability.

Purely Competitive Seller

A seller in a market characterized by many buyers and sellers, free entry and exit, homogeneous products, and perfect information.

Total Cost

The sum of all costs incurred by a business in producing a given level of output, including both fixed and variable costs.

Product Price

refers to the amount of money required to purchase a specific good or service offered by a business.