The "Rate of Return That Makes the NPV of a Capital

question 198

Multiple Choice

The "rate of return that makes the NPV of a capital project equal to zero" is best described by which of the following terms?

• A)Accounting rate of return
• B)Internal rate of return
• C)Discount rate
• D)Net present value

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Definitions:

Compounded Monthly

Refers to the process of adding interest to the principal balance of a loan or investment on a monthly basis, allowing the interest to then earn interest in the subsequent months.

Quadruple

To multiply or increase fourfold; also refers to a quantity that is four times as large as another.

Effective Annual Rate

The interest rate that is adjusted for compounding over a yearly period.

Per Month

A term used to describe an action or event that occurs once every month.