The internal rate of return concept is best explained by which of the following?
A) rate where NPV is equal to zero
B) point where initial investment has been returned
C) marginal cost of capital
D) average book value

Question

Quizplus · Accepted Answer

The internal rate of return is the discount rate at which the net present value of future cash flows equals zero. Therefore, option A, rate where NPV is equal to zero, is the best choice to explain this concept. Option B refers to the payback period, while option C refers to the cost of capital, and option D refers to the accounting concept of average book value.

The Internal Rate of Return Concept Is Best Explained by Which