If the Internal Rate of Return Is Used as the Discount

question 97

Multiple Choice

If the internal rate of return is used as the discount rate in computing net present value,the net present value will be:

• A)positive.
• B)negative.
• C)zero.
• D)unknown.

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Definitions:

Inventory Holding Gains

Inventory holding gains are increases in the value of inventory a company holds due to price inflation or increased demand, not yet realized through sales.

U.S. GAAP

The Generally Accepted Accounting Principles in the United States, a common set of accounting rules and standards for financial reporting.

IFRS

International Financial Reporting Standards, a set of accounting guidelines that provide a global framework for how public companies prepare financial statements.

Lower of Cost

An accounting principle requiring that inventory be recorded at the lower of its original cost or current market value.