A. This is not the definition of the internal rate of return. The internal rate of return is the discount rate that results in a present value of the future cash inflows that is equal to the initial cash outflow.
B. The internal rate of return is the discount rate at which the net present value of the project is zero. This means that at that particular discount rate used to discount the future cash inflows to their present value, the present value of the cash inflows equals the initial cash outflow.
C. This is not the definition of the internal rate of return. Operational cash flows are only one portion of the information used to calculate the internal rate of return.
D. This is not the definition of the internal rate of return. The hurdle rate is another term for the required rate of return used by a firm to discount future cash inflows back to their present value in calculating a project's net present value.
