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343. The IRR is the discount rate which makes the net present value of a project equal to zero. This rate is the maximum discount rate which can be applied to the project and still cause the project to be acceptable. By knowing the IRR, decision makers know that the project will remain acceptable as long as the discount rate does not increase to a level above that of the IRR. The IRR is the turning point between an accept and a reject decision.
Ch9 SummaryCategory# of QuestionsLevel: Basic239Level: Challenge13Level: Intermediate91LO1: Capital Budgeting1LO1: Capital Budgeting Decisions2LO1: Capital Budgeting in Practice1LO1: Capital Budgeting Process1LO1: Capital Budgeting Rules1LO1: Capital Budgeting Techniques1LO1: Cash Flow Estimation1LO1: Conventional Cash Flow1LO1: Decision Rules2LO1: Discounted Cash Flow Valuation2LO1: Independent Projects2LO1: Investment Analysis5LO1: Investment Criteria1LO1: Mutually Exclusive Projects2LO1: Net Present Value51LO1: Net Present Value and Internal Rate of Return1LO1: Net Present Value Rule6LO1: NPV and Firm Value1LO1: NPV and Security Values1LO1: NPV and Shareholder Wealth1LO1: NPV Investment Criteria1LO1: Project Analysis1LO1: Short-Term Biases1LO2: Discounted Payback3LO2: Payback17LO2: Payback Method1LO2: Payback Period20LO2: Payback Rule5LO3: Discounted Payback14LO3: Discounted Payback Period10LO3: Discounted Payback Rule2LO3: IRR1LO3: NPV & Discounted Payback1LO3: Payback vs. Discounted Payback1LO4: AAR1LO4: AAR Analysis1LO4: Accounting Rate of Return Rule2LO4: Average Accounting Return34LO4: Average Accounting Return Rule1LO5: Capital Budgeting Techniques1LO5: Conventional Cash Flows1LO5: Crossover Point1LO5: Crossover Rate1LO5: Internal Rate of Return37
LO5: Internal Rate of Return and Net Present Value2LO5: Internal Rate of Return Rule4LO5: Internal Rate of Return Versus Net Present Value1LO5: Interpreting IRR and NPV1LO5: IRR1LO5: IRR & Net Present Value1LO5: IRR Analysis1LO5: IRR vs. NPV1LO5: Multiple IRRs2LO5: Multiple Rates of Return2LO5: Mutually Exclusive Decisions1LO5: Mutually Exclusive Projects1LO5: Net Present Value and Internal Rate of Return4LO5: NPV vs. IRR1LO6: Capital Budgeting Techniques2LO6: Crossover Point6LO6: Crossover Rate8LO6: Decision Rules2LO6: Independent Projects1LO6: Modified IRR1LO6: Mutually Exclusive Projects4LO6: NPV & Profitability Index1LO6: Profitability Index7LO6: Ranking Projects1LO7: Capital Budgeting Decisions1LO7: Capital Budgeting Techniques2LO7: Decision Rules2LO7: Investment Analysis2LO7: Mutually Exclusive Investments1LO7: Mutually Exclusive Projects7LO7: NPV vs. PI1LO7: Profitability Index26LO7: Profitability Index Rule3Ross - Chapter 009352Type: Concepts137Type: Definitions46Type: Essay13Type: Problems147