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      Question

      The discount rate that makes the NPV of a project equal

      to zero is called the:
      A Cost of Capital Correct Answer Incorrect Answer
      B Accounting Rate of Return Correct Answer Incorrect Answer
      C Internal Rate of Return Correct Answer Incorrect Answer
      D Hurdle Rate Correct Answer Incorrect Answer

      Solution

      The Internal Rate of Return (IRR) is defined as the discount rate at which the Net Present Value (NPV) of all cash flows (both positive and negative) from a project or investment equals zero.

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