Which of these is a capital budgeting technique that generates decision rules and associated metrics for choosing projects based upon the implicit expected geometric average of a project's rate of return?
A) Discounted payback
B) Net present value
C) Internal rate of return
D) Profitability index

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is a capital budgeting technique that calculates the rate of return at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero. This method implicitly assumes the geometric average of a project's expected rate of return, making it a unique tool for comparing the profitability of different investments or projects.

Which of These Is a Capital Budgeting Technique That Generates