Which of the Following Best Describes the Internal Rate of Return

question 21

Multiple Choice

Which of the following best describes the internal rate of return?

• A) The discount rate that makes the cost of the investment equal to the present value of the cash flows
• B) The discount rate that is used to borrow funds from a lender
• C) The ratio of average annual income to average amount invested
• D) The rate at which an investment pays back

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Definitions:

Probability

The likelihood or chance of an event occurring.

Randomly Selected

Chosen in such a way that every member of a population has an equal chance of being included in the sample.

Presidential Election

A presidential election is the process by which a country or a political entity elects the head of state or president.

Bias

A systematic error that leads to incorrect estimates or perceptions either in data collection, analysis, interpretation, or publication processes.