Which of the Following Statements About the Internal Rate of Return

Multiple Choice

Which of the following statements about the internal rate of return (IRR) capital budgeting technique is correct?

A) It is the same as the firm's required rate of return.
B) It is the discount rate that equates the present value of a project's cash outflows (or costs) with the present value of its cash inflows.
C) It is the discount rate at which the net present value of a project is negative.
D) It is the rate of return at which a project's payback period is shortest.
E) It is the discount rate that should be used to evaluate a project with multiple cash outflows.