MANAGEMENT

Detailed explanation-1: -IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis. IRR calculations rely on the same formula as NPV does. Keep in mind that IRR is not the actual dollar value of the project. It is the annual return that makes the NPV equal to zero.

Detailed explanation-2: -The NPV or current value is the present value of future cash flows minus the initial cost. The IRR is the discount rate. This causes the present value of future cash flows to become equal to the initial cost. This means that the NPV will be zero.

Detailed explanation-3: -Answer and Explanation: Whenever the internal rate of return on a project equals that project’s required rate of return, the net present value equals zero. IRR is a discount rate that makes the present value of the future cash inflows equal to the initial cost. At this discount rate the NPV will be zero.

Detailed explanation-4: -The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of a project zero. In other words, it is the expected compound annual rate of return that will be earned on a project or investment.

Detailed explanation-5: -The internal rate of return (IRR) is the discount rate at which the net present value of an investment is equal to zero.