The Internal Rate of Return Is Defined as The

question 25

Multiple Choice

The internal rate of return is defined as the:

• A)maximum rate of return a firm expects to earn on a project.
• B)rate of return a project will generate if the project in financed solely with internal funds.
• C)discount rate that equates the net cash inflows of a project to zero.
• D)discount rate which causes the net present value of a project to equal zero.
• E)discount rate that causes the profitability index for a project to equal zero.

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Definitions:

Prime Costs

The direct costs of production, typically consisting of direct materials and direct labor.

Indirect Labour

Workers in a manufacturing process whose activities are not directly related to the production of specific goods or services, such as maintenance staff and managers.

Cost of Goods Purchased

The total expense for raw materials and goods acquired for resale by a company during a specific period, excluding any indirect costs.

Transportation Inward

Costs incurred to bring materials to a business, often included as part of inventory costs.