What term is used for the discount rate which, when applied to the cash flows of a project, results in a zero net present value?
A) Internal rate of return
B) Absolute rate of return
C) Multiple internal rate
D) Net future value

Question

Quizplus · Accepted Answer

The term used for the discount rate which results in a zero net present value is the internal rate of return (IRR). This is the rate that makes the net present value of all cash flows from a particular investment equal to zero. It is used as a measure of the profitability of an investment, and projects with higher IRRs are generally preferred over those with lower ones.

What Term Is Used for the Discount Rate Which, When