📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!


    Question

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

    at which:
    A The Profitability Index is 1. Correct Answer Incorrect Answer
    B The Net Present Value (NPV) is zero. Correct Answer Incorrect Answer
    C The Payback Period equals the project life. Correct Answer Incorrect Answer
    D The accounting rate of return is maximum. Correct Answer Incorrect Answer

    Solution

    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.

    Practice Next
    ask-question