When positive net cash flows are generated before the end of a project, and when these cash flows are reinvested at an interest rate that is greater than the internal rate of return, (a) The resulting rate of return is equal to the internal rate of return. (b) The resulting rate of return is less than the internal rate of return. (c) The resulting rate of return is equal to the reinvestment rate of return. (d) The resulting rate of return is greater than the internal rate of return.
When positive net cash flows are generated before the end of a project, and when these cash flows are reinvested at an interest rate that is greater than the internal rate of return, (a) The resulting rate of return is equal to the internal rate of return. (b) The resulting rate of return is less than the internal rate of return. (c) The resulting rate of return is equal to the reinvestment rate of return. (d) The resulting rate of return is greater than the internal rate of return.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
When positive net cash flows are generated before
the end of a project, and when these cash flows are reinvested at an interest rate that is greater than the
(a) The resulting rate of return is equal to the internal
rate of return.
(b) The resulting rate of return is less than the
internal rate of return.
(c) The resulting rate of return is equal to the reinvestment
rate of return.
(d) The resulting rate of return is greater than the
internal rate of return.
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