The Modified Internal Rate of Return Assumes That

question 25

Multiple Choice

The modified internal rate of return assumes that

• A)inflows are invested at the traditional interest rate of return.
• B)inflows are reinvested at the cost of capital.
• C)outflows must be funded with debt.
• D)outflows must be funded with equity.

---

Definitions:

Investment

The allocation of resources, such as capital, time, or assets, to a project or asset with the expectation of generating future profits.

Households' Decision

The choices made by households regarding consumption, savings, and labor supply based on income, preferences, and economic conditions.

Save Less

Refers to a decrease in the amount of income that individuals or entities set aside as savings.

Demand-for-loanable-funds

The desire for borrowing money from available financial resources, influenced by the interest rate.