What is the internal rate of return?
A)The discount rate that makes the cash inflows equal to the cash outflows.
B)The discount rate that the firm uses to calculate the profit margin.
C)The discount rate after adjusting for inflation.
D)The difference between nominal and real returns.
E)None of the above.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the present value of cash inflows equal to the initial investment or cash outflows. It is a measure of the profitability of an investment and is used to determine if a project is worth pursuing.

What Is the Internal Rate of Return