The rate of discount which equilibrates the cost of capital good s and the expected future returns from the capital good is known as
A)Internal rate of return
B)Net present value
C)Average annual rate of return
D)None of the above

Question

Quizplus · Accepted Answer

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 equilibrates the cost of capital goods and the expected future returns, making it the correct answer.

The Rate of Discount Which Equilibrates the Cost of Capital