The internal rate of return method of analyzing capital investment proposals uses the present value concept to compute an internal rate of return expected from the proposals.

Question

Quizplus · Accepted Answer

The statement is true. The internal rate of return (IRR) method is a capital budgeting technique that calculates the discount rate at which the present value of a project's cash inflows equals the present value of its cash outflows. This rate is known as the internal rate of return (IRR) and is used to evaluate the feasibility of capital investment proposals.

The Internal Rate of Return Method of Analyzing Capital Investment