The true economic yield produced by an asset is summarized by the asset's<u> internal rate of return.</u>
<h3>
What is internal rate of return?</h3>
- In financial analysis, the internal rate of return (IRR) is a statistic used to calculate the profitability of possible investments. IRR is a discount rate that, in a discounted cash flow analysis, reduces all cash flows' net present values (NPV) to zero.
- The same formula is used for NPV calculations and IRR calculations. Remember that the project's true financial value is not represented by the IRR.
- The annual return is what brings the NPV to a negative value. The more attractive an investment is to make, the greater the internal rate of return.
- IRR can be used to rank numerous potential investments or projects on a pretty even basis because it is consistent for investments of different types.
To learn more about internal rate of return with the given link
brainly.com/question/13016230
#SPJ4
Videotapes, Physical evidence (something with possible DNA), Pictures.
Answer:
Project 1
Explanation:
IO PI IRR LIFE
Project 1 $300,000 1.12 14.38% 15 years
Project 2 $150,000 1.08 13.32% 6 years
Project 3 $100,000 1.20 16.46% 3 years
Assume that the cost of capital is 12%.
We should invest in the projects that have the highest profitability index (PI) first.
PI = present value of project's cash flows / initial outlay
Projects with a high PI should also have high IRRs and this applies to this situation:
- Project 3 has a PI of 1.2 and an IRR of 16.46%
- Project 1 has a PI of 1.12 and an IRR of 14.38%
- Project 2 has a PI of 1.08 and an IRR of 13.32%
If the protects weren't mutually exclusive and the company had enough money for the 3 of them, then it should invest in all of them. But that is not the case, here, since the company has to decide in which project it will invest (only 1 project). The first option should be project 3, but since it cannot be repeated, and its life is short, I would go for project 1.
Besides, it is the only possible answer since you have to choose only 1 project (remember projects are mutually exclusive).
Answer:
A company's stock
Explanation:
There are two main capital structure i.e. debt and the equity. The debt is the loan which is to be borrowed by the individual or a company in order to raise a capital. While the other one is equity in which it shows the ownership stake in the company also it involves the securities than should be traded in the stock markets
While going through the options given, the second option is correct as other options are the examples of debt and the same is not considered for an equity investment