The internal rate of return method

Question

Quizplus · Accepted Answer

The internal rate of return method is a discounted cash flow technique, similar to the NPV method. It calculates the rate at which the present value of cash inflows equals the present value of cash outflows, resulting in a zero net present value. Projects with an internal rate of return greater than the required rate of return are accepted, while those with internal rates of return less than the required rate of return are rejected. Time value of money is a fundamental principle of the internal rate of return method.

The Internal Rate of Return Method