What Is the Internal Rate of Return (IRR)of an Investment

question 22

Multiple Choice

What is the internal rate of return (IRR) of an investment that requires an initial investment of $10,000 today and pays $14,000 in one year's time?

• A)4%
• B)14%
• C)24%
• D)40%

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Definitions:

Marginal Products

This refers to the additional output that results from using an extra unit of a particular input, assuming other inputs are constant in the production process.

Production Function

A mathematical expression that describes the relationship between input factors and the output of goods or services.

Returns To Scale

The change in output of a production process as all inputs are increased proportionally.

Marginal Product

The additional output that is produced by using one more unit of a particular input, holding the levels of all other inputs constant.