The Internal Rate of Return for a Project Will Increase

question 19

Multiple Choice

The internal rate of return for a project will increase if:

• A)the required rate of return is reduced.
• B)each cash inflow is moved such that it occurs one year later than originally projected.
• C)the total amount of the cash inflows is reduced.
• D)the initial cost of the project can be reduced.
• E)the salvage value of the project is omitted from the analysis.

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Definitions:

Interest Rate

A fee that's calculated as a proportion of the principal sum and is required by the lender from the borrower for lending money or assets.

$M

A shorthand notation for million dollars, used mainly in financial contexts to denote monetary values.

Interest Rate

The percentage charged on borrowed money, reflecting the cost of borrowing or the gain from saving.

Capital Projects

Large-scale investment projects that require significant amounts of capital, typically in infrastructure, buildings, or technology, aiming for long-term benefits.