BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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IRR equivalent to the expenses of capital
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IRR more noteworthy than the expenses of capital
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IRR is not exactly the expenses of capital
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none of the above mentioned
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Detailed explanation-1: -Answer: (B) IRR more noteworthy than the expense of capital. Explanation: The internal rate of return (IRR) is the yearly pace of development that a venture is supposed to create. IRR is determined involving a similar idea as net present worth (NPV), except that it sets the NPV equivalent to nothing.
Detailed explanation-2: -The discount rate is the interest rate used to determine the present value of future cash flows in a discounted cash flow (DCF) analysis. This helps determine if the future cash flows from a project or investment will be worth more than the capital outlay needed to fund the project or investment in the present.
Detailed explanation-3: -False-A capital budgeting project is accepted if the internal rate of return equals or exceeds the required internal rate of return. The net present value method can be used in situations where the required rate of return varies over the life of the project.
Detailed explanation-4: -The payback period disregards the time value of money and is determined by counting the number of years it takes to recover the funds invested. For example, if it takes five years to recover the cost of an investment, the payback period is five years.