What Is the Internal Rate of Return

question 38

Multiple Choice

What is the internal rate of return?

• A) The discount rate at which the present value of expected cash inflows and outflows is equal.
• B) The discount rate that makes the net present value of the cash flows equal zero.
• C) The discount rate at which the present value of expected cash inflows and outflows is equal AND the discount rate that makes the net present value of the cash flows equal zero.
• D) The present value factor used to discount cash flows.

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Definitions:

Uniform Commercial Code

An exhaustive compilation of statutes that control all business dealings across the United States.

Specific Performance

A legal remedy in contract law requiring a party to perform their obligations as agreed, rather than paying damages.

Remedy at Law

Legal means to enforce a right or compensate for a violation, including monetary damages or specific performance.

Third-Party Beneficiaries

Individuals who are not directly involved in a contract but stand to benefit from it as stipulated by the contracting parties.