An investment should be undertaken so long as it has a positive Return on Investment (ROI) Net Present Value (NPV) Internal Rate of Return (IRR) Interest Rate after Taxes A person borrowing $100,000 at an interest rate of 8 compounded semi annually who is able to and does turn around and lend the same $100,000 at an interest rate of 12 compounded semi annually while incurring negligible costs in doing so may have engaged in interest rate Compounding Arbitrage Manipulation Amortization Suppose US government bonds have an interest rate of 7 per year If you invest $6,000 in the US government bond for one year, the exchange rate today is 20 South African rands (currency) to one U S dollar, and the dollar depreciates 8 with respect to the rand over the next year, what is the rate of return in terms of rands at the end of that year (3 pts ) Which of the following is true about the Internal Rate of Return (IRR) The IRR rule says to accept a project only if the present values of its cash inflows exceeds the present value of its cash outflows also, the IRR is the discount rate which makes the present value of the future cash inflows equal to the present value of the future cash outflows The IRR rule says to accept a project if its rate of return is greater than the opportunity cost of capital also, the IRR is the discount rate which makes the present value of the future cash inflows equal to the present value of the future cash outflows The IRR rule says to accept a project only if the present value of its cash inflows exceeds the present value of its cash outflows also, the IRR is the rate of return determined by subtracting the cash outflows from the cash inflows and then dividing by the cash outflows The IRR rule says to accept a project if its rate of return is greater than the opportunity cost of capital also, the IRR is the rate of return determined by subtracting the cash outflows from the cash inflows and then dividing by the cash outflows

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Posted on Oct 02, 2024

An investment should be undertaken so long as it has a positive:
1. Return on Investment (ROI)
2. Net Present Value (NPV)
3. Internal Rate of Return (IRR)
4. Interest Rate after Taxes
A person borrowing $100,000 at an interest rate of 8% compounded semi-annually who is able to and does turn around and lend the same $100,000 at an interest rate of 12% compounded semi-annually while incurring negligible costs in doing so may have engaged in interest rate ______________.
1. Compounding
2. Arbitrage
3. Manipulation
4. Amortization
Suppose US government bonds have an interest rate of 7% per year. If you invest $6,000 in the US government bond for one year, the exchange rate today is 20 South African rands (currency) to one U.S. dollar, and the dollar depreciates 8% with respect to the rand over the next year, what is the rate of return in terms of rands at the end of that year? (3 pts.)

Which of the following is true about the Internal Rate of Return (IRR)?
1. The IRR rule says to accept a project only if the present values of its cash inflows exceeds the present value of its cash outflows; also, the IRR is the discount rate which makes the present value of the future cash inflows equal to the present value of the future cash outflows.
2. The IRR rule says to accept a project if its rate of return is greater than the opportunity cost of capital; also, the IRR is the discount rate which makes the present value of the future cash inflows equal to the present value of the future cash outflows.
3. The IRR rule says to accept a project only if the present value of its cash inflows exceeds the present value of its cash outflows; also, the IRR is the rate of return determined by subtracting the cash outflows from the cash inflows and then dividing by the cash outflows.
4. The IRR rule says to accept a project if its rate of return is greater than the opportunity cost of capital; also, the IRR is the rate of return determined by subtracting the cash outflows from the cash inflows and then dividing by the cash outflows.