Conceptually, What Is the Internal Rate of Return

question 49

Multiple Choice

Conceptually, what is the internal rate of return?

• A) Number of years required for a project to return the cash invested in it
• B) Discount rate that equates the present value of cash inflows to present value of cash outflows
• C) Interest rate a company can generate on its corporate bonds and preferred stock
• D) Average annual net income divided by initial investment in a project

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Definitions:

Accounts Payable

Liabilities owed by a business to creditors for purchases or services received that have not yet been paid for.

Periodic Inventory System

A method used in accounting to determine inventory levels by taking physical counts at specific periods.

Perpetual Inventory System

An approach to inventory accounting where transactions are immediately documented through computerized point-of-sale systems and software designed for managing enterprise assets.

Inventory Shrinkage

The decrease in product inventory from the time of acquisition from a supplier to the moment it's sold to a customer, frequently as a result of theft, damage, or mistakes.