alleryStart learning →The internal rate of return sets the present value of the inflows equal to that of the:
ARoyalties
BPenalties
COutflows
DDividends
Answer & Solution
Correct answer: C. Outflows
1. The internal rate of return is a particular discount rate.
2. It is the rate that balances the two present values against each other.
3. It sets the present value of the inflows equal to the present value of the outflows.
4. So the inflows are matched against the outflows.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 16 'How Companies Think about Investing', sections 16.1-16.5_
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