A sophisticated capital budgeting technique that can be computed by subtracting a project's initial investment from the present value of its cash inflows discounted at a rate equal to the firm's cost of capital is called internal rate of return.

Question

Quizplus · Accepted Answer

The technique described is the Net Present Value (NPV), not the Internal Rate of Return (IRR). IRR is the discount rate that makes the NPV of cash flows equal to zero.

A Sophisticated Capital Budgeting Technique That Can Be Computed by Subtracting