Reference no: EM132793138

Problem 1: If the net present value of a project is exactly zero, based on a discount rate of 10%, then the internal rate of return is:

a. equal to 10%.
b. less than 10%.
c. greater than 10%.
d. cannot be determined from this data.

Problem 2: Which of the following is not true regarding the internal rate of return method of evaluating investments?

a. The internal rate of return method focuses on cash flows rather than accounting net income.
b. The internal rate of return is the discount rate that results in a project's net present value being a positive number.
c. The internal rate of return is the rate of return of an investment project over its useful life.
d. When a project has identical cash flows in every year, dividing the investment required by the annual net cash inflow results in a factor that can be used to determine the internal rate of return.