The discount rate that makes the net present value of an investment exactly equal to zero is called the:
A)external rate of return.
B)internal rate of return.
C)average accounting return.
D)profitability index.
E)equalizer.

Question

Quizplus · Accepted Answer

The definition provided is that of the internal rate of return, which is the discount rate at which the NPV of an investment is zero. Therefore, the best choice is B: internal rate of return.

The Discount Rate That Makes the Net Present Value of an Investment