1. With regard to Internal rate of return:

   		It is the actual rate of return for an investment with proper accounting for time value of money.
   		It is the discount rate that would make the net present value of an investment equal to zero.
   		The higher an investment's internal rate of return, the better.
   		All of the above.

5 points

QUESTION 14

1. An investment would cost $10,000, have annual net cash flows of $7,500 per year for 5 years and no terminal value. What is the net present value of this investment if your discount rate is 10%.

   		$18,431
   		$11,518
   		$37,500
   		$27,500