The IRR is the rate that allows the present value of the benefits to exactly equal the present value of the costs.

Question

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The Internal Rate of Return (IRR) is the discount rate at which the net present value (NPV) of all the cash flows (both positive and negative) from a project or investment equals zero. This means the present value of the benefits exactly equals the present value of the costs, making the IRR a critical financial metric for evaluating the viability of investments.

The IRR Is the Rate That Allows the Present Value