A project's IRR is the interest rate that
A) causes the project's NPV to equal zero.
B) is used to discount cash flows when computing the project's NPV.
C) is used to determine which one of two mutually exclusive projects should be accepted.
D) is used to compute the project's discounted payback period.

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. This means it is the rate at which the project breaks even in terms of NPV.

A Project's IRR Is the Interest Rate That