If you do not reinvest the money you receive from an investment, you are allowing yourself to receive back less than the 10% you invested for. The example given in the book explains that if you invest in a $1,000 bond that yields 8% over 20 years, you will receive $80 per year. If you decide not to reinvest this money, you will receive a total of $2,600, which equates to approximately 4.9 IRR. If you reinvested the $80 you received annually from the bond you invested in, you would have earned $4,661.4.8 When the present value of the benefit returns is greater than the original cost of the investment made, the investment is considered satisfactory. For IRR, as long as the return is higher than the required rate of return, it can also be recognized as a satisfactory investment. 4.9 Risk is uncertainty about the actual return on an investment. The risk-return trade-off is a relationship between risk and return in which investors want to obtain the highest possible return based on the risk they are willing to take. The higher the risk, the higher the gain