Which one of the following will occur when the internal rate of return equals the required...
Which one of the following will occur when the internal rate of return equals the required return?
The average accounting return will equal 1.0.
The profitability index will equal 1.0.
The profitability index will equal 0.
The net present value will equal the initial cash outflow.
The profitability index will equal the average accounting return.
Homework Answers
If,
Required Rate = IRR
It means that NPV = 0,
Initial Investment = PV(Future Cash Flows)
And,
Profitability Index = PV(Future Cash Flow)/Initial Investment
So,
Profitability Index = 1,
So,
The profitability index will equal 1.0
Add Answer to:
Which one of the following will occur when the internal rate of
return equals the required...
18. Which of the following is NOT true about the internal rate of return: A) A...
18. Which of the following is NOT true about the internal rate of return: A) A good project is one with IRR greater than the required return. B) IRR is the discount rate that results in a zero net present value for the project. C) Crossover rate for two projects is the IRR of the project with the difference of the cash flows of the two projects.. D) For two projects of the same size, IRR will usually choose the...
The internal rate of return is defined as the: A. discount rate that causes the profitability...
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.
Which one of the following statements is correct? Assume cash flows are conventional. Explain how you...
Which one of the following statements is correct? Assume cash flows are conventional. Explain how you got your answer A. If two projects are mutually exclusive, you should select the project with the shortest payback period. B. The profitability index will be greater than 1.0 when the net present value is negative. C. Projects with conventional cash flows may sometimes have multiple internal rates of return. D. If the required return exceeds IRR, the profitability index will be less than...
Which one of the following indicates that a project is definitely acceptable? A. Profitability index greater than...
Which one of the following indicates that a project is definitely acceptable? A. Profitability index greater than 1.0 B. Negative net present value C. Modified internal rate return that is lower than the requirement D. Zero internal rate of return E. Positive average accounting return
The internal rate of return is defined as the: O Discount rate that causes the profitability...
The internal rate of return is defined as the: O Discount rate that causes the profitability index for a project to equal zero. O Rate of return a project will generate if the project in financed solely with internal funds. O Discount rate that equates the net cash inflows of a project to zero. O Maximum rate of return a firm expects to earn on a project. O Discount rate which causes the net present value of a project to...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that use present values are (1) Net present value method (NPV) and (2) Internal rate of return (IRR) method. Methods That Use Present Values Of the two capital investment evaluation methods, a defining characteristic NPV and IRR is that they consider the time value of money. This means that money tomorrow is worth less than money today....
Which one of the following indicates that a project should be rejected? O1) Payback period that...
Which one of the following indicates that a project should be rejected? O1) Payback period that is shorter than the requirement period 2) Negative net present value 3) Internal rate of return that exceeds the required return 4) Profitability index is greater than 1.0 5) Positive net present value
(2. Which one of the following can be defined as the NPV in percentage terms? A....
(2. Which one of the following can be defined as the NPV in percentage terms? A. Profitability index B. Internal rate of return C. Net present value D. Accounting rate of return E. Modified internal rate of return
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3,...
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3, 4), AN Service Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its main- tenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to...
A project with an initial investment of $74000 and a profitability index of 1.239 also has an internal rate of return o...
A project with an initial investment of $74000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $74000. O $59726. $91686. $82880.
18. Which of the following is NOT true about the internal rate of return: A) A good project is one with IRR greater than the required return. B) IRR is the discount rate that results in a zero net present value for the project. C) Crossover rate for two projects is the IRR of the project with the difference of the cash flows of the two projects.. D) For two projects of the same size, IRR will usually choose the...
The internal rate of return is defined as the: O Discount rate that causes the profitability index for a project to equal zero. O Rate of return a project will generate if the project in financed solely with internal funds. O Discount rate that equates the net cash inflows of a project to zero. O Maximum rate of return a firm expects to earn on a project. O Discount rate which causes the net present value of a project to...
Which one of the following indicates that a project should be rejected? O1) Payback period that is shorter than the requirement period 2) Negative net present value 3) Internal rate of return that exceeds the required return 4) Profitability index is greater than 1.0 5) Positive net present value
(2. Which one of the following can be defined as the NPV in percentage terms? A. Profitability index B. Internal rate of return C. Net present value D. Accounting rate of return E. Modified internal rate of return
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3, 4), AN Service Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its main- tenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to...
A project with an initial investment of $74000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $74000. O $59726. $91686. $82880.
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago