What does the IRR of a project represent?
- A The discount rate at which NPV equals zero
- B The rate of inflation over the project life
- C The interest rate charged by lenders
- D The return required by shareholders
Answer
The discount rate at which NPV equals zero
IRR is the break-even discount rate. A project is generally accepted if its IRR exceeds the cost of capital, though IRR can mislead with unconventional cash flows.





