Which investment appraisal technique calculates the discount rate which, applied to expected cash flows, produces a net present value of zero?

Question

Quizplus · Accepted Answer

The investment appraisal technique that calculates the discount rate which, applied to expected cash flows, produces a net present value of zero is called the internal rate of return (IRR). It is a measure of the profitability of an investment and is useful for comparing different investment opportunities. A project with an IRR higher than the required rate of return is considered desirable as it generates positive net present value.

Which Investment Appraisal Technique Calculates the Discount Rate Which, Applied