Question

Internal rate of return of a project is the discount rate at which the

• A. Profit after tax is zero
• B. Net present value is zero
• C. Written down value of the equipment is zero
• D. Early production from the long wall face

Hint:

IRR is the rate where NPV = 0 — a key concept in capital budgeting.

Answer 1

The Correct Option is B

The internal rate of return (IRR) is defined as the discount rate that makes the net present value (NPV) of all cash flows from a project equal to zero. At this rate, the present value of the project's inflows equals the present value of its outflows.