What Is an Attribute of the Internal Rate of Return

question 63

Multiple Choice

What is an attribute of the internal rate of return?

• A)It is the interest rate that makes the NPV of the investment equal to zero.
• B)It is the interest rate that makes the cost of the investment equal to the present value of the investment's net cash inflows.
• C)It is used in the capital rationing process.
• D)All of the above are attributes of the internal rate of return.

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Definitions:

Per Unit Tax

A tax applied on a product based on a fixed amount per unit sold, impacting the supply curve by shifting it upward or to the left.

Monopolist

An individual or firm that is the sole provider of a particular product or service, possessing significant market power to determine prices and output levels.

Price Increase

The rise in the cost of goods or services over time, typically reflected in higher consumer prices.

Marginal Revenue

Marginal Revenue is the additional income earned from selling one more unit of a product or service, crucial for decision-making regarding production levels.