The Internal Rate of Return of a Capital Investment

question 5

Multiple Choice

The internal rate of return of a capital investment

• A)Changes when the required rate of return changes.
• B)Is equal to the annual net cash flows divided by one half of the project's cost when the cash flows are an annuity.
• C)Must exceed the required rate of return in order for the firm to accept the investment.
• D)Is similar to the yield to maturity bond.
• E)Answers c and d are both correct.

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Definitions:

Parameter v

This seems to be a typographical error or a non-standard term. If "Parameter" was intended, it refers to a value that characterizes a population in statistics. NO.

Mean E(t)

The expected value of a random variable at time t, reflecting the average outcome if an experiment were repeated many times.

Degrees of Freedom

The number of independent values in a statistical calculation that are free to vary.

Number

An object in mathematics employed for counting, measuring, and labeling purposes.