Below are two potential investment alternatives:

-Assume straight-line amortization in all computations, and ignore income taxes. The internal rate of return in case A is approximately
A) 8 percent.
B) 10 percent.
C) 12 percent.
D) 14 percent.

Question

Below are two potential investment alternatives:
  
-Assume straight-line amortization in all computations, and ignore income taxes. The internal rate of return in case A is approximately
A) 8 percent. 
B) 10 percent. 
C) 12 percent. 
D) 14 percent.

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. In this case, assuming straight-line amortization, the IRR is approximately 10 percent.

Below Are Two Potential Investment Alternatives