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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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