Answer to Question #266450 in Microeconomics for Buzz

Question

Q1. What is the meaning of Internal rate of return (IRR)?

(i) It is the interest rate where PW =0

(ii) It is the interest rate where PW >0

(iii) It is the interest rate where PW<0

(iv) None of these.

Q2. What is the meaning of Internal rate of return (MARR)?

(i) Below this rate of return the investment proposal is not acceptable.

(ii) It is the marginal accepted rate of return.

(iii) It is the maximum accepted rate of return.

(iv) None of these.

Q3. What is an effective interest rate?

(i) It is nominal interest rate multiplied with time.

(ii) It is nominal interest rate divided with time.

(iii) R = (1+i/n)^n -1

(iv) None of these.

Q4. What is the correct formula of equal payment series compound?

(i) F= P (1+i)^n

(ii) F = A[ {(1+i)^n -1}/ i ]

(iii) F =(1+i)^n -In -1

(iv) None of the above.

Q5. What is the formula for equal payment series present worth amount?

(i) P = F/ (1+i)^n

(ii) P = r(1+t)^n

(iii) P = A [{(1+i)^n -1}/i(1+i)^n}]

(iv) None of the above.

Answer 1

Q1.

(i)It is the interest rate where PW =0

Q2.

(i)Below this rate of return the investment proposal is not acceptable.

Q3.

(iii) R = (1+i/n)^n -1

Q4.

(ii) F = A[ {(1+i)^n -1}/ i ]

Q5.

(iii) P = A [{(1+i)^n -1}/i(1+i)^n}]