The Rate That Yields a Net Present Value of Zero

question 31

Multiple Choice

The rate that yields a net present value of zero for an investment is the:

• A) Internal rate of return.
• B) Accounting rate of return.
• C) Net present value rate of return.
• D) Zero rate of return.
• E) Payback rate of return.

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Definitions:

Standard

A benchmark or a set level of performance or achievement that is established for a process or product.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated, based on the efficiency of operations.

Supplies Cost

Supplies cost refers to the expense incurred in purchasing office or production supplies that are necessary for day-to-day operations.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with production volume, such as utilities and raw materials, which do not remain constant as production levels change.