The rate that causes the present value of all cash inflows to equal the initial investment of a project is referred to as:

Question

Quizplus · Accepted Answer

The rate that causes the present value of all cash inflows to equal the initial investment of a project is referred to as Internal Rate of Return (IRR). Therefore, the correct option is D. Option A (NPV) represents the difference between the present value of future cash inflows and the initial investment, Option B (Payback period) represents the time required for the initial investment to be recovered, and Option C (TVM) represents the concept that money has different values at different points in time.

The Rate That Causes the Present Value of All Cash