The internal rate of return: A)Does not require a predetermined discount rate B)

Question

The internal rate of return:

A)Does not require a predetermined discount rate

B) Is often used to rank investment proposals

C)May be compared to the cost of capital in project evaluation

D)All of the above .

A project’s ________________ is computed as the present value of project related cash inflows and outflows.

a) Accounting rate of return

b)Internal rate of return

C)Net present value

D)Present value index .

Question 60

Which of the following is needed to compute a project's net present value?

a) A computer

b)Accounting rate of return

c)Discount rate

d) Internal rate of return

a) A computer

b)Accounting rate of return

c)Discount rate

d) Internal rate of return

Explanation / Answer

Answer: D)All of the above .

Because The internal rate of return calculates a discount rate at which the net present value of the project would be zero. It can be used to rank projects and can be compared to the cost of capital.

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