For investment projects,the internal rate of return (IRR):
A)rule indicates acceptance of an investment when the IRR is less than the discount rate.
B)is the rate generated solely by the cash flows of the investment.
C)is used primarily to rank projects of varying sizes.
D)is the rate that causes the net present value of a project to equal the project's initial cost.
E)can effectively be used to compare all types and sizes of mutually exclusive projects.

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. It is determined solely by the project's cash flows and not by external factors such as the discount rate or initial cost.

For Investment Projects,the Internal Rate of Return (IRR)