Which one of the following capital-budgeting evaluation techniques is based on finding a discount rate which causes the net present value to be zero?
A) net present value
B) internal rate of return
C) profitability index
D) payback

Question

Quizplus · Accepted Answer

The technique based on finding a discount rate that results in a zero net present value is the internal rate of return. This is because the internal rate of return is the discount rate which equates the present value of cash inflows with the initial investment, resulting in a net present value of zero.

Which One of the Following Capital-Budgeting Evaluation Techniques Is Based