An investment's internal rate of return equates
A) dividend payments and capital gains
B) initial cost and subsequent cash inflows
C) initial cash outflow and the sale price
D) dividend payments and the investment's cost

Question

An investment's internal rate of return equates​
A) ​dividend payments and capital gains
B) ​initial cost and subsequent cash inflows
C) ​initial cash outflow and the sale price
D) ​dividend payments and the investment's cost

Quizplus · Accepted Answer

The internal rate of return (IRR) is the rate at which the present value of expected cash inflows from an investment equals the initial cost of the investment. In other words, the IRR equates the initial cost with subsequent cash inflows. Therefore, choice B is the best answer.

An Investment's Internal Rate of Return Equates​

An Investment's Internal Rate of Return Equates