The Internal Rate of Return of a Project Is the Discount

question 43

Multiple Choice

The internal rate of return of a project is the discount rate that:

• A) adds the cash outflow to the current period.
• B) reduces the cash outflow from the current period.
• C) maximizes the net present value of the investment.
• D) makes the net present value of the investment zero.

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Definitions:

Component

A distinct and often smaller part of a larger system, that contributes to the overall functionality or structure of that system.

Payout Ratio

A financial metric indicating the percentage of earnings a company pays to its shareholders in the form of dividends.

Earnings Distributed

The portion of a company's profit paid out to shareholders, typically in the form of dividends.

Intraperiod Tax Allocation

This accounting technique involves allocating income tax expense or benefit among different components of comprehensive income within a single reporting period.