The internal rate of return is:

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of a project equal to zero. Therefore, choice B is correct. A is incorrect because the IRR may be greater than or equal to the weighted average cost of capital; it only needs to be higher for the project to be acceptable. C is incorrect because a positive NPV can be achieved at any discount rate lower than the IRR. D is incorrect because the IRR can be compared to the weighted average cost of capital to evaluate a project's potential profitability.

The Internal Rate of Return Is