How can the internal rate of return of a project be determined?
A) By finding the discount rate that yields a net present value of zero.
B) By determining that the project cash flows are equal each year.
C) By determining that the project profitability index is greater than one.
D) By some other method than listed above.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of the project's cash flows equal to zero. Therefore, to determine the IRR, one needs to find the discount rate that yields an NPV of zero.

How Can the Internal Rate of Return of a Project