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

Question

Quizplus · Accepted Answer

The internal rate of return is the rate of return at which the net present value of the project is zero, and therefore represents the compound annual rate of return that the firm can expect to earn from the project. The other options (discount rate, opportunity cost, cost of capital) are important considerations in capital budgeting decisions, but do not directly represent the rate of return that the firm can expect to earn from the project.

The ________ Is the Compound Annual Rate of Return That