The present value of an investment must be computed by discounting cash flows at the internal rate of return.

Question

Quizplus · Accepted Answer

The present value of an investment is typically computed by discounting future cash flows at a discount rate, not necessarily at the internal rate of return (IRR). The IRR is the rate at which the present value of cash flows equals the initial investment, and it's used for different purposes, such as comparing the profitability of investments.

The Present Value of an Investment Must Be Computed by Discounting