The internal rate of return will equal the discount rate when the net present value equals zero.

Name: The internal rate of return will equal the discount rate when the net present value equals zero.
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Question

Quizplus · Accepted Answer

This statement is true. The internal rate of return (IRR) is the discount rate that sets the net present value (NPV) of cash flows from an investment equal to zero. So, if the NPV is zero, then the IRR must be equal to the discount rate used to calculate the NPV.

The Internal Rate of Return Will Equal the Discount Rate