The Internal Rate of Return for a Project Can Be

question 30

Multiple Choice

The internal rate of return for a project can be determined:

• A)only if the project's cash flows are constant.
• B)by finding the discount rate that yields a zero net present value for the project.
• C)by subtracting the company's cost of capital from the project's profitability index.
• D)only if the project profitability index is greater than zero.

---

Definitions:

Depreciable Assets

Assets whose costs are allocated over their useful lives, reflecting the decline in their value due to use or obsolescence.

Reported Income

The earnings of a company as reported in its financial statements, in accordance with the accounting standards.

Book Value

Represents the net value of a company's assets as recorded on the balance sheet, calculated as assets minus liabilities.

Fair Value

The market-based measurement of the value of an asset or liability based on current transactions between willing parties, outside of a forced liquidation or distress sale.