Question

Which of the following statements regarding various aspects of our finance review is the most correct? A. The lenders to a large corporation generally provide the hands-on management of operations. B. An investment project with a negative net present value is unacceptable. C. Existing bonds rise in value when interest rates in the lending market increase. D. Internal rate of return is the discount rate that causes a project’s net present value to be $0. E. A common stockholder will receive the same dividends every year until the shares mature.

Answer 1

Answer:

D. Internal rate of return is the discount rate that causes a project’s net present value to be $0

Explanation:

The internal rate of return is the rate at which the net present value is zero that means the initial investment i.e. made should be equivalent to the present value of the cash flows after considering the discount factor

In an equation form

Internal rate of return is

Net present value = 0

hence, the option D is correct