The internal rate of return may be defined as:
A) the discount rate that makes the NPV cash flows equal to zero.
B) the difference between the market rate of interest and the NPV.
C) the market rate of interest less the risk-free rate.
D) the project acceptance rate set by management.

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 present value of the project's cash inflows equals the present value of its outflows.

The Internal Rate of Return May Be Defined As