Question

The Internal Rate of Return (IRR) is the discount rate

Q: Answer-The Internal Rate of Return (IRR) is the discount rate at which:

By definition, the Internal Rate of Return IRR is the discount rate that makes the Net Present Value NPV of all cash flows from a particular project equal to zero. It is the break-even cost of capital.

at which:

A The Profitability Index is 1.

B The Net Present Value (NPV) is zero.

C The Payback Period equals the project life.

D The accounting rate of return is maximum.

Practice Next

More Capital Budgeting Questions

Find the wrong number in the series.

1, 8, 27, 65, 125, 216, 343
896 2688 336 1008 124 378
Find the wrong number in the following series.

12, 18, 24, 30, 37, 42
Find the wrong number in the given number series.

630, 180, 60, 24, 12, 8, 5
99 124 160 209 273 355 454
21, 23, 27, 35, 51, 87
174 180 198 252 414 910
In each of the following number series, one term is wrong. Find the wrong term.

2, 6, 18, 54, 160, 486
Find the wrong number in the given number series.

253, 542, 216, 579, 179, 620
147 490 707 831 895 922 930
...

The Internal Rate of Return (IRR) is the discount rate

Solution