A Project's IRR

question 102

Multiple Choice

A project's IRR:

• A)is the average rate of return necessary to pay back the project's capital providers.
• B)will change with the cost of capital.
• C)is equal to the discounted cash flows divided by the number of cash flows if the cash flows are a perpetuity.
• D)All of these answers are correct.

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Definitions:

Total Sales Revenue

The total income generated from selling goods or services before any expenses are subtracted.

Selling Price

The amount of money for which a product or service is sold to the customer, including all applicable costs and markup.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs.

Break-Even Point

The financial point at which total costs and total revenue are equal, resulting in no net loss or gain.