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Test your understanding with targeted questions related to the topic.
Question 1
Easy
What is IRR?
💡 Hint: What does NPV equal when IRR is used?
Question 2
Easy
When should a project be accepted based on IRR?
💡 Hint: Think about the comparison with required rates.
Practice 4 more questions and get performance evaluation
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What does IRR stand for?
💡 Hint: What does IRR measure in relation to investments?
Question 2
If the IRR of a project is less than the required rate of return, what should be the decision?
💡 Hint: Reflect on the comparison rule for project acceptance.
Solve 1 more question and get performance evaluation
Push your limits with challenges.
Question 1
A project requires an initial investment of $5,000 and generates cash inflows of $1,200 annually for 6 years. Calculate the IRR and assess if the project is favorable if the required rate of return is 8%.
💡 Hint: Use software to find the IRR accurately.
Question 2
Consider two projects, A with cash flows of $1,000 per year for 5 years and an initial cost of $3,500, and B with cash flows of $1,500 per year but an initial cost of $5,000. Calculate their IRRs and suggest which project is preferable.
💡 Hint: Calculate NPV at different rates to determine IRR for both projects.
Challenge and get performance evaluation