1. Internal rate of return is interest rate where: OA. NPV = 0 OB. PV of...

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business economics

Answer 1

Answer #1

Answer 1

Internal Rate of Return is the interest rate where Net Present Value(NPV) = 0.

NPV = Present value of benefit - Present value of cost = 0 => Present value of benefit = Present value of cost.

When Annual benefit = Annual cost, then again NPV = 0 and thus IRR is the interest rate where Annual benefit = Annual cost.

Hence option (A), (B) and (C) all are correct.

Hence, the correct answer is (D) All of the above.

Answer 2

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