The break-even ratio and the internal rate of return

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Reference no: EM131894321

1. The internal rate of return:

1) will always exceed the discount rate employed to calculate the net present value.

2) will exceed the discount rate used to calculate net present value only when the net present value is less than zero.

3) will exceed the discount rate used to calculate net present value only when the net present value is equal to zero.

4) will exceed the discount rate used to calculate net present value only when the net present value is greater than zero.

2. The break-even ratio:

1) is sometimes called the default ratio.

2) relates net operating income to operating expenses.

3) indicates the relationship between gross income and operating expenses.

4) expresses the extent to which net operating income can decline before becoming insufficient to meet the debt service obligation.

Reference no: EM131894321

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