The internal rate of return equals the rate that yields a profitability index of 1 for an investment. O True O False
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A:
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- Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1A realized return is the rate of return actually earned on an investment. Group of answer choices True FalseThis calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero A. internal race of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method
- LO5 Present the internal rate of return criterion and its strengths and weaknesses. LO6 Calculate the modified internal rate of return. LO7 Illustrate the profitability index and its relation to net present value.When npv is negative, the discount rate is greater than the actual return on investment. A. True B. FalseMatch each term with the best definition or descriptor. NPV is __________ ( a unitless ratio, a unit of time, a dollar vallue, or a rate of return). IRR is ___________ ( a unitless ratio, a unit of time, a dollar vallue, or a rate of return). Profitability index is __________( a unitless ratio, a unit of time, a dollar vallue, or a rate of return).
- If the internal rate of return (IRR) of a well-behaved investment alternative is equal to MARR, which of the following statements about the other measures of worth for this alternative must be true? i. PW = 0 ii. AW = 0. Solve, a. I onlyb. II only c. Neither I nor II d. Both I and II.There are some cases in which the present worth (( PW )) of an investment is positive while its annual worth ((AW )) is negative. Select one: O True O FalseMake a simple example of the following: a. Capital Gain (or Losses) b. Expected Return c. Real Return d. Risk-free Return e. Required Return f. Holding Period Return
- Which of the following correctly orders the investment rules of average accounting return (AR), internal rate of return (IRR), and net present value (NPV) from the most desirable to the least desirable? a. IRR, AR, NPV. b. AR, IRR, NPV. c. NPV, AR, IRR. d. AR, NPV, IRR. e. NPV, IRR, AR.The most accurate way to analyze the profitability of an investment is to compute the payback period. A. True B. FalseDefine each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR) method;profitability index (PI)