The Internal Rate of Return Is

question 31

Multiple Choice

The internal rate of return is:

• A) more reliable as a decision making tool than net present value whenever you are considering mutually exclusive projects.
• B) equivalent to the discount rate that makes the net present value equal to one.
• C) difficult to compute without the use of either a financial calculator or a computer.
• D) dependent upon the interest rates offered in the marketplace.
• E) a better methodology than net present value when dealing with unconventional cash flows.

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Definitions:

Operating Activities

Transactions and other events related to the day-to-day function of a business, typically involving revenue and expense activities directly affecting cash flow.

Investments In Securities

Financial assets such as stocks, bonds, or mutual funds purchased with the intent of generating income or appreciating in value.

Operating Activities

Activities that relate to a company's primary business operations, such as selling goods or services, which are reflected in its cash flow statement.

Interest Received

The amount of interest income earned on investments like bonds, savings accounts, or other interest-bearing assets during a specific period.