Final answer:
The internal rate of return (IRR) is found by determining the discount rate that results in an NPV of zero for the project, which is answer A) Zero.
Step-by-step explanation:
A project's internal rate of return (IRR) can be determined by finding what discount rate results in a Net Present Value (NPV) of zero for the project. The correct answer is A) Zero. The IRR is the rate at which the present value of future cash flows from the investment equals the initial investment cost, meaning it is the discount rate that makes the NPV of all cash flows from a particular project equal to zero. For example, if an investment project requires an initial outlay of cash and generates future cash inflows, the IRR would be the discount rate at which the present value of those future cash flows exactly offsets the initial outlay. This metric is especially useful in capital budgeting to gauge the profitability of an investment and to compare the desirability of different projects.