A Project Has an Internal Rate of Return Which Is

question 68

Multiple Choice

A project has an internal rate of return which is equal to the company's discount rate.The project's profitability index:

• A)would be 0.0.
• B)would be 0.5.
• C)would be 1.0.
• D)cannot be determined from information provided.

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Definitions:

Consumer Surplus

The differentiation in the total expenditure consumers are willing and have the economic means to allocate for a good or service, versus what they effectively allocate.

Perfect Competition

A market structure characterized by a complete absence of rivalry among firms, where no single firm can influence the market price or product quality, leading to optimal allocation of resources.

Natural Monopoly

A market structure where a single supplier is most efficient due to the high fixed or startup costs of operating, making it impractical for new entrants to compete.

Returns to Scale

Describes how output changes in response to a proportional increase in all inputs in the production process; can be classified as increasing, constant, or decreasing.