The internal rate of return the rate of return at which the net present value of all cash is rom a particular project is equal to zero .
it is the rate of return that is expected by a company in any project for avoiding the losses
It is not the interest rate at which the firm used to lend money to other firms, neither it is the interest rate for the borrowing money .
or borrowing money, interest rate is charged generally by the banks.
Show the correct answer is option B
Internal rate of return is: a. the interest rate which on firm uses to lend money...
The interest rate on securities affects the demand for money because: A. The interest rate is the opportunity cost of holding money. B. The interest rate is the reward for lending money. C. The interest rate is both the cost of borrowing money and the reward for lending money. D. The interest rate is the cost of borrowing money. E. The interest rate influences how much we consume and save.
1. Internal rate of return is interest rate where: OA. NPV = 0 OB. PV of benefits = PV of costs C. Annual benefits = annual costs OD. All of the above E. None of the above
One definition of Internal Rate of Return for a project would be: 1. The interest rate that makes the present worth of benefits equal to the present worth of costs. 2. The least amount of interest the company is willing to accept for a project or investment. 3. P divided by A 4. The Rate of Return on the increment between the project and the next higher one. 5. None of the above
48. The internal rate of return of an investment is: A. the same as return on investment. B. zero when the present value of an investment equals its cost. C. the interest rate that equates the present value of an investment with its cost D. equal to the market rate of interest when an investment is made
“Two companies examined the same capital budgeting project, which has an internal rate of return equal to 19 percent. One firm accepted the project, but the other firm rejected it. One of the firms must have made an incorrect decision.” Discuss the validity of this statement. How does agility fit into the decision? Explain.
The internal rate of return is defined as the: A. discount rate that causes the profitability index for a project to equal zero. B. discount rate which equates the net present value of cash inflows to the net present value of cash outflows to zero. C. maximum rate of return a firm expects to earn on a project. D. rate of return a project will generate if the project in financed solely with internal funds.
Q32. Equity investors can borrow money to purchase a firm's stock. Assume that the borrowing interest rate for equity investors is r If r is greater than zero, holding all other assumptions unchanged, how will this affect the statement of M&M proposition I, no taxes? M&M proposition I (no taxes) will still hold since the borrowing cost is very low compared to other costs. M&M proposition I (no taxes) will no longer hold and the unlevered firm is more valuable...
If you lend money at a 12% nominal interest rate, but you expect inflation to be 7% over the life of the loan, then you expect your purchasing power to grow at a rate of [1%. The real interest rate is negative when the nominal interest rate is If the nominal interest rate is 3% and the expected rate of inflation is 1%, then the real interest rate is ▼| the inflation rate. A. 2%. O B. 096. 3%. 1%....
Fill in the table using the following information.Assets required for operation: $10,400Firm A uses only equity financingFirm B uses 40% debt with an 8% interest rate and 60% equityFirm C uses 50% debt with a 10% interest rate and 50% equityFirm D uses 50% preferred stock financing with a dividend rate of 10% and 50% equity financingEarnings before interest and taxes: $1,040If your answer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your...
The internal rate of return (IRR) is the interest rate that sets the net present value (NPV) of the cash flows equal to zero. A. True B. False