Net Present Value Is Calculated Using The

question 28

Multiple Choice

Net present value is calculated using the:

• A)internal rate of return
• B)required rate of return
• C)rate of return required by the investment bankers
• D)None of these answers is correct.

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Definitions:

Inflation

How quickly the average price of goods and services elevates, lessening the power to purchase.

APR

Annual Percentage Rate, the annual rate charged for borrowing or earned through an investment, which includes all fees and costs associated with the transaction.

Mortgage Rate

The interest rate charged on a mortgage loan, determined by the lender, which affects the monthly payments and total amount paid over the life of the loan.

Annualized (Geometric)

Refers to a method of converting short-term rates of return into longer-term rates that account for the effect of compounding over a full year.