24. Which one of the following defines the internal rate of return for a project

Question

24. Which one of the following defines the internal rate of return for a project? A. Discount rate that creates a zero cash flow from assets B. Discount rate that results in a zero net present value for the project C. Discount rate that results in a net present value equal to the project's initial cost D. Rate of return required by the project's investors E. The project's current market rate of return 25. Both Projects A and B are acceptable as independent projects. However, the selection of either one of projects eliminates the option of selecting the other project. Which one of the following terms best descril relationship between Project A and Project B? A. Mutually exclusive B. Conventional C. Multiple choice D. Dual return E. Crosswise

Explanation / Answer

Answer:

24. B

IRR is the rate at which the present value of cash inflows from the project is equal to initial cost of the project, which means the net present value of the project is zero at this rate.

25. A

Mutually exclusive , when one project is selected over the other project then the other project will automatically get eliminated. So we can say that when the projects are independent and acceptance of one will automatically eliminates the second project, this relation is termed as Mutually exclusive.

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