PRC-2 · Chapter 6 · Question 2 of 45
If the calculated Internal Rate of Return (IRR) is used as the specific discount rate to evaluate a project's cash flows, the resulting Net Present Value (NPV) will mathematically be:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Exactly zero
Explanation
By definition, the Internal Rate of Return (IRR) is the exact discount rate that forces the present value of future cash inflows to equal the initial investment, making the NPV zero.
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