If the internal rate of return is used as the discount rate in the net present value calcula-tion, the net present value will be
A) zero.
B) positive.
C) negative.
D) undeterminable.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate at which the net present value (NPV) of all the cash flows (both positive and negative) from a project or investment equals zero. Therefore, if the IRR is used as the discount rate in the NPV calculation, the NPV will indeed be zero.

If the Internal Rate of Return Is Used as the Discount