Question

Which of the following is also known as the after-tax IRR? Multiple Choice Cost of capital....

Which of the following is also known as the after-tax IRR? Multiple Choice Cost of capital. Market rate. Real or nominal rate. Risk-free rate.

Multiple Choice

  • A - Cost of capital.

  • B - Market rate.

  • C - Real or nominal rate.

  • D - Risk-free rate.

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Answer #1

Cost of capital is the costs of finance for company and is not known as after tax IRR

Market rate is the interest rate expected by investors and is not termed as after tax IRR

Risk free rate is the interest rate for security which do not involve any risk and is not termed as after tax IRR

After tax IRR is the internal rate of return earned on investment which would provide NPV of zero. This after tax IRR is sometimes termed as real or nominal rate earned.

Thus, option (c) is correct

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