What is the internal rate of return (IRR)? A) The discount rate that makes the NPV of a project zero B) The rate of return that minimizes the risk of a project C) The return earned on the initial investment over a fixed period D) The expected rate of return in the future

What is the internal rate of return (IRR)? A) The discount rate that makes the NPV of a project zero B) The rate of return that minimizes the risk of a project C) The return earned on the initial investment over a fixed period D) The expected rate of return in the future

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3DQ

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Question

What is the internal rate of return (IRR)?

A) The discount rate that makes the NPV of a project zero
B) The rate of return that minimizes the risk of a project
C) The return earned on the initial investment over a fixed period
D) The expected rate of return in the future

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n 0 1 2 3 4 5 6 7 8 9 10 A -$250 $60 $970 B -$200 $90 $90 $60 $60 Net Cashflow с -$70 $20 $10 $5 -$50 $60 $50 $40 $30 $20 $10 D -$300 $270 $250 -$129 -$20 $120 $40 E -$90 -$100 -$50 $0 $150 $150 $100 $100
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