CPA-03342 - investment where the present value of the cash...

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Becker Professional Education Registered to: Lucille McElroy 2011 Edition. Distributed by DeVry/Becker Educational Development Corp. Copyright © 2010 DeVry/Becker Educational Development Corp. All rights reserved. Question CPA-03342 As used in capital budgeting analysis, the internal rate of return uses which of the following items in its computation? Net Incremental Incremental Average Net Annual Investment Operating Income Cash Flows a. Yes No Yes b. Yes Yes No c. No No Yes d. No Yes Yes Explanation Choice "a" is correct. Yes, No, Yes. Internal rate of return (IRR) determines the compound interest rate of an
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Unformatted text preview: investment where the present value of the cash inflows equals the present value of the cash outflows. The IRR is the discount rate that results in a net present value of zero. To calculate the IRR: First calculate: Net increment investment (investment required) Factor of the IRR Net annual cash flows = Second: locate the factor derived above to identify the rate of return it represents. Choices "b", "c", and "d" are incorrect, per above....
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This note was uploaded on 04/01/2011 for the course ECON 592 taught by Professor Jeanhuang during the Spring '11 term at Keller Graduate School of Management.

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