Practice Internal Rate Of Return (irr) (24.8) - Time Value of Money - Management 1 (Organizational Behaviour/Finance & Accounting)

Practice: Internal Rate of Return (IRR)

Lesson 24.8Time Value of Money

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9 questions

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3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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Quiz
3 questions · about 2 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What does IRR stand for?
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Think about what rate it refers to in financial terms.
Question 2.
What is the main purpose of calculating IRR?
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How does it help in decision-making?
3Question 3.
What is the IRR?
- The maximum loss from a project
- The rate at which NPV is zero
- The total cash flow over the project's life
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Think about what IRR signifies in the evaluation of a project.
4Question 4.
True or False: A project with IRR below the required return should be accepted.
- True
- False
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Consider the acceptance criteria related to IRR.
Question 5.
You’re analyzing two projects: Project A has cash flows of ₹4000, ₹5000, and ₹6000 for three years with an initial investment of ₹10000; Project B has cash flows of ₹7000, ₹8000 for the first two years and ₹10000 in the third year with an investment of ₹15000. Find the IRR for both projects and determine which project to pursue based on IRR.
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Focus on determining NPV first, then find the discount rate.
Question 6.
Explain why IRR can sometimes lead to misleading results for projects with non-conventional cash flows.
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Think about what non-conventional cash flows imply for re-investment rates.

5 more questions in this section. Enroll free to practise them all.