The ________ Rule States That a Firm Should Accept Any

question 47

Multiple Choice

The ________ rule states that a firm should accept any project with a present value of cash inflows greater than the present value of cash outflows.

• A)internal rate of return
• B)payback
• C)modified internal rate of return
• D)net present value

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Mutually Exclusive Projects

Investment opportunities where the acceptance of one project requires the rejection of another.

Cost of Capital

The desired return a corporation aims for in its investment activities to retain its market capitalization and lure in investments.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of investments, indicating the annualized effective compounded return rate.