A firm has an opportunity to invest in the project with only one positive future cash flow of $150,000. What is the internal rate of return of the project if the initial cost is $150,000?

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of a project zero. If the initial cost and the future cash flow are equal, the IRR is 0 percent, as there is no gain or loss.

A Firm Has an Opportunity to Invest in the Project