1. All else equal, if market interest rates increase, a project's IRR will

Group of answer choices

not be effected

increase

decrease

2.

If a firm finances a project with internal equity, the firm needs to take the internal cost into account because internal equity represents

Group of answer choices

an outside firm externality to the stockholders.

a sunk cost to the stockholders.

an inside firm externality to the stockholders.

an opportunity cost to the stockholders.

3.

You buy a rental property for $500,000 today. The property provides $25,000 in rental income each year for 6 years, starting next year. You plan to sell the property in year 6 and expect to be able to sell it for $600,000. You expect inflation to be 5% per year over the 6-year time period. If your expectations are correct, what is the average per year real return you earn on the rental property investment?