What is the projected annual yield of a project investment, incorporating both initial and ongoing costs into the estimated percentage growth rate that the project will have?
Why other options are incorrect:
Annual rate of return:
While this term describes the percentage return on an investment over a year, it doesn't necessarily consider the time value of money or future cash flows like IRR.
Net present value (NPV):
NPV is a metric that represents the present value of all future cash flows of a project minus the initial investment. It doesn't directly give the annual yield but is used in conjunction with IRR to evaluate a project's profitability.
Return on investment (ROI):
ROI is a simpler measure of profitability, calculated by dividing net profit by initial investment. It doesn't account for the time value of money or future cash flows, making it less suitable for evaluating projects with long-term cash flows.
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JesseChou_123
1 month ago