The Internal Rate of Return on an Asset Can Be

question 8

Multiple Choice

The internal rate of return on an asset can be calculated:

• A) if the return is greater than the hurdle rate.
• B) if the asset's cash flows are identical to the future value of a series of cash flows.
• C) if the future value of a series of cash flows can be arrived at by the annuity accumulation factor.
• D) by finding a discount rate that yields a zero net present value.
• E) by finding a discount rate that yields a positive net present value.

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Definitions:

Diagram (A)

A graphical representation used to illustrate or clarify information, processes, or systems.

Price

The amount of money expected, required, or given in exchange for something else.

Quantity

The amount or number of a material or immaterial good considered as a unit or in total.

Long-Run Cost Diagram

A graphical representation that shows how the costs incurred by a firm change over time with varying levels of output when all inputs are variable.