The discount rate that makes the net present value of an investment exactly equal to zero is called the:
A) External rate of return.
B) Internal rate of return.
C) Average accounting return.
D) Profitability index.
E) Equalizer.

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 rate is used to evaluate the attractiveness of a project or investment.

The Discount Rate That Makes the Net Present Value of an Investment