The Internal Rate of Return Method and the ________ Method

question 20

Multiple Choice

The internal rate of return method and the ________ method usually result in the same investment decisions.

• A) payback period
• B) accounting rate of return
• C) net present value
• D) return on investment

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Definitions:

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit from operations, often involving minimizing costs and maximizing revenues.

Negative Externality

A negative externality exists when a product or decision results in a negative effect on a third party not directly involved in the transaction.

Positive Externality

A benefit that affects someone who did not choose to incur that benefit, often associated with public goods or services.