Explain the Difference in Economics Between Self-Interest and Selfish Behaviour

question 9

Essay

Explain the difference in economics between self-interest and selfish behaviour.

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Definitions:

Internal Rate

The rate of return that makes the net present value (NPV) of all cash flows from a particular project equal to zero, often used in capital budgeting to assess potential investments.

Cash Flows

The entire sum of money flowing in and out of an enterprise, notably affecting its ability to meet short-term obligations.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Cost of Capital

The rate of return a firm needs to generate on its investment initiatives to preserve its market value and appeal to investors.