The compound rate of return that equates the present value of the cash inflows with the initial investment outlay is called the internal rate of return (IRR).

Name: The compound rate of return that equates the present value of the cash inflows with the initial investment outlay is called the internal rate of return (IRR).
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Question

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This is a true statement. The IRR is the discount rate that makes the net present value of the cash flows equal to zero.

The Compound Rate of Return That Equates the Present Value