The discount rate that makes the net present value of investment exactly equal to zero is the:
A) Payback period.
B) Internal rate of return.
C) Average accounting return.
D) Profitability index.
E) Discounted payback period.

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of an investment exactly equal to zero. It is used to evaluate the attractiveness of a project or investment.

The Discount Rate That Makes the Net Present Value of Investment