The appeal of the IRR technique is due to the general disposition of business people to think in terms of rates of return rather than actual dollar returns.

Question

Quizplus · Accepted Answer

The statement is true as the internal rate of return (IRR) technique is widely used in business and finance to gauge the profitability of an investment project by calculating the rate of return that makes the net present value (NPV) of future cash flows equal to zero. Business people tend to focus on rates of return as they provide a useful benchmark for comparing different investment opportunities and determining which ones are likely to generate the best returns on investment.

The Appeal of the IRR Technique Is Due to the General