Which of the following is the rate of return, based on discounted cash flows, that a company can expect to earn by investing in a capital asset?

Question

Quizplus · Accepted Answer

Internal rate of return (IRR) is the rate of return, based on discounted cash flows, that a company can expect to earn by investing in a capital asset. The accounting rate of return (ARR) measures the profitability of an investment using accounting information, rather than discounted cash flows. Bank interest rates and return on investment (ROI) may be relevant to investing, but they are not specifically related to the calculation of expected returns based on discounted cash flows.

Which of the Following Is the Rate of Return, Based