What is the Discount Rate that Makes NPV Zero Called?

1 FINANCE MCQS

In Internal Rate of Return (IRR), the discount rate that makes Net Present Value (NPV) zero is called ____________?

Positive rate of return
Negative rate of return
External rate of return
Internal rate of return

Correct Answer: D. Internal rate of return

Detailed Explanation

The Internal Rate of Return (IRR) is the discount rate at which the Net Present Value (NPV) becomes zero. At this rate, the present value of cash inflows equals the present value of cash outflows, making IRR a key decision metric in capital budgeting.

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In Internal Rate of Return (IRR), the discount rate that makes Net Present Value (NPV) zero is called ____________?

In Internal Rate of Return (IRR), the discount rate that makes Net Present Value (NPV) zero is called ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…