According to the Internal Rate of Return Method,a Firm Should

question 63

Multiple Choice

According to the internal rate of return method,a firm should accept a project if the ________.

• A) internal rate of return is less than the cost of capital
• B) internal rate of return exceeds the cost of capital
• C) cost of capital exceeds the internal rate of return
• D) internal rate of return exceeds the firm's cost of debt
• E) internal rate of return exceeds the firm's cost of equity

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Definitions:

Stock Split

An action by a company to increase the number of its outstanding shares by issuing more shares to current shareholders.

Market Price

The amount at which an asset is bought or sold in the market.

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including those held by institutional investors and restricted shares owned by the company’s officers and insiders.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the total market value remains the same.