The ________ is the compound annual rate of return that a firm will earn if it invests in the project and receives the given cash inflows.
A) risk-free rate
B) internal rate of return
C) opportunity cost
D) cost of capital

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. It represents the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. In other words, it is the rate at which the project's inflows equal its outflows. Therefore, IRR represents the compound annual rate of return that a firm will earn if it invests in the project and receives the given cash inflows.

The ________ Is the Compound Annual Rate of Return That