The IRR for Galt Motors of Manufacturing the Armatures in House

question 44

Multiple Choice

The IRR for Galt Motors of manufacturing the armatures in house is closest to:

• A) 48%
• B) 49%
• C) 50%
• D) 53%

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Definitions:

Excess Reserves

Excess Reserves are the reserves that banks hold over and above the legal or required minimum they need to keep against deposits.

Open Market Purchase

A monetary policy operation where a central bank buys government securities from the market in order to inject liquidity and encourage lending and investment.

Required Reserve Ratios

Regulatory requirements determining the minimum fraction of customer deposits that commercial banks must hold as reserves, rather than loan out.

Discount Rate

Discount Rate is the interest rate charged by central banks on loans they offer to commercial banks or the rate used to discount future cash flows to their present value.