The Discount Rate That Makes the Net Present Value of an Investment

question 83

Multiple Choice

The discount rate that makes the net present value of an investment exactly equal to zero is called the:

• A)external rate of return.
• B)internal rate of return.
• C)average accounting return.
• D)profitability index.
• E)equalizer.

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Definitions:

Causal Relationship

A connection between two events where one directly influences or causes the other.

Causal Arguments

Arguments that establish a cause-and-effect relationship between two or more things.

Inductive Argument

A type of reasoning in which the premises seek to supply strong evidence for (not absolute proof of) the truth of the conclusion.

Positive Correlation

The incidence of one event increases when the second one increases.