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  3. (1) out of three explanations, which uses the conc

(1) Out of three explanations, which uses the concept of required rate of return? ...

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Accounting

(1) Out of three explanations, which uses the concept of required rate of return?

  1. He plans to invest in a project. He wants at least 10% return from the investment.
  2. He plans to invest in a project. He will get at most 10% return from the investment.
  3. He plans to invest in a project. He forecasts the return from the investment will be 10%.

(2) Out of three explanations, which uses the concept of internal rate of return?

  1. If I invest $1 million, I want to get at least 10% return from the investment.
  2. If I invest $1 million, I estimate to get about 10% return from the investment.
  3. If I invest $1 million in the project, I estimate to get about 10% return from the investment. Therefore, I will invest in the project.

(3) Which explains the purpose of CAPM (capital asset pricing model)?

  1. To estimate a companys cost of debt
  2. To estimate an internal rate of return of an investment opportunity
  3. To estimate a companys cost of equity

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