Discount rate that causes a project to have a net present value of zero used to rank projects in comparison with market rates of interest?
Correct answer: C. Internal rate or returns
- A. Rate or returns
- B. External rate or returns
- C. Internal rate or returns
- D. None
Explanation
The internal rate of return is the discount rate at which a project's net present value becomes zero, and it can be compared with the market interest rate. A higher internal rate of return generally indicates a more attractive project, subject to other conditions.
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