Unlike the Net Present Value Criteria, the Internal Rate of Return

question 37

Multiple Choice

Unlike the net present value criteria, the internal rate of return approach assumes an interest rate equal to

• A) the relevant cost of capital.
• B) the project's internal rate of return.
• C) the project's opportunity cost.
• D) the market's interest rate.

---

Definitions:

Price-taker Firm

A company that has no control over the market price and must accept the prevailing market price for its products.

Short Run

A period in economics during which some factors of production are fixed, limiting the ability to fully adjust to market changes.

Elasticity of Market Supply

The degree to which the quantity supplied of a good changes in response to a change in price.

Output Expansion

The increase in the production of goods and services in an economy or by a firm, often as a result of increased demand or improved production capabilities.