Choose the correct answer: The internal rate of return on an investment refers to the interest earned on: a) The initial investment b) The money recovered from the investment c) Income from an investment d) The unrecovered balance of the investment

Finance Dec 11, 2020

Choose the correct answer:

The internal rate of return on an investment refers to the interest earned on:

a) The initial investment

b) The money recovered from the investment

c) Income from an investment

d) The unrecovered balance of the investment

Expert Solution

The internal rate of return on an investment refers to the interest earned on:

d) The unrecovered balance of the investment

Explanation:

The internal rate of return is the interest rate that makes the net present value of an investment equal to zero. This is the interest rate earned on the unrecovered balance of the investment such that when the project terminates, the unrecovered project balance will be zero.

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