This internal rate of return was equal to 16% if a net present value of the project was zero based on a discount rate of 16%.
The term discount designates a sum or a percentage subtracted from an item's usual selling price.
The interest rate at which the present value of the flows will match the purchase price or initial outlay for the investment is known as the internal return rate.
This rate results in a net current value of 0, to put it simply.
When a net present value at zero is achieved with a discount rate of 16%, the internal rates of return is also 16%.
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