The Internal Rate of Return (IRR) Is the Interest Rate

question 53

True/False

The internal rate of return (IRR) is the interest rate that sets the net present value (NPV) of the cash flows equal to zero.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount by which sales can drop before a business incurs a loss.

Break-even Point

The level of sales at which total revenues equal total costs, and the business makes no profit but also incurs no loss.

Break-even Analysis

An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no net loss or gain.

Operating Income

Income from a company's main business activities, excluding expenses such as interest and taxes.