Match the items of List-I with the items of List-II: List-IList-II a) IRR i. Process of analysing the…
IRR is the discount rate at which NPV is zero; a zero-NPV project earns its required return and is acceptable under the non-negative-NPV rule. Cost of capital is the…
Choose your answer
Match the items of List-I with the items of List-II:
| List-I | List-II |
|---|---|
| a) IRR | i. Process of analysing the potential fixed asset investment |
| b) NPV is equal to zero | ii. Proportion of equity × cost of equity + proportion of debt × cost of debt |
| c) Cost of capital | iii. Project is acceptable |
| d) Capital budgeting | iv. NPV = zero |
Answer and explanation
Correct answer B
IRR is the discount rate at which NPV is zero; a zero-NPV project earns its required return and is acceptable under the non-negative-NPV rule. Cost of capital is the weighted cost of the financing components, and capital budgeting analyses potential fixed-asset investments, giving a-iv, b-iii, c-ii, d-i.
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Karnataka SET (KSET)