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.

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Definitions:

Canada Yield Curve

A plot of the yields on Government of Canada notes and bonds relative to maturity.

Retractable Bond

Bond that may be sold back to the issuer at a prespecified price before maturity.

Debenture

An unsecured loan certificate issued by a company, backed only by the general creditworthiness and reputation of the issuer.

Default Risk

The likelihood that a debtor may not fulfill their debt contract obligations.