The__________ is the discount rate that equates the present value of the cash inflows with the initial investment.
A) average rate of return
B) internal rate of return
C) cost of capital
D) payback period

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the interest rate that makes the net present value (NPV) of all cash flows from a particular set of cash flows equal to zero. In other words, it is the rate at which the present value of the inflows is equal to the initial investment. Therefore, the IRR is the discount rate that equates the present value of the cash inflows with the initial investment.

The__________ Is the Discount Rate That Equates the Present Value