PRC-2 · Chapter 5 · Question 32 of 50
The 'Internal Rate of Return' (IRR) is formally defined as the discount rate at which:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The Net Present Value (NPV) becomes exactly zero.
Explanation
The IRR is the 'break-even' discount rate where the present value of future cash inflows perfectly equals the initial investment cost.
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