The discount rate that makes the net present value of an investment exactly equal to zero is called the:
A) External rate of return.
B) Internal rate of return.
C) Average accounting return.
D) Proﬁtability index.
E) Equalizer.

Question

Quizplus · Accepted Answer

The discount rate that makes the net present value of an investment exactly equal to zero is called the Internal Rate of Return (IRR). It is a widely used capital budgeting technique to determine the potential profitability of an investment. The other options listed - external rate of return, average accounting return, profitability index, and equalizer - do not refer to this specific concept.

The Discount Rate That Makes the Net Present Value of an Investment