Which of the following is a valid method of calculating the internal rate of return? A. Calculate
Question:
Which of the following is a valid method of calculating the internal rate of return? A. Calculate the present value of each cash flow for each year and subtract it from the cost of the investment. B. Plot three or four combinations of net present value (NPV) and discount rate on a graph, connect the points with a smooth line, and locate the discount rate at which NPV=0. C. Calculate the project net income for each year, and then compute a simple average. Average the project’s beginning and ending book value. Divide the average net income by the average book value. D. Compute the total of the present values of each year’s cash flow. Divide the total of the present values by the initial investment.
Financial Accounting Information For Decisions
ISBN: 978-0324672701
6th Edition
Authors: Robert w Ingram, Thomas L Albright