By definition, the net present value is equal to zero when the discount rate is equal to the:

A) Average account rate of return.
B) Rate used in the discounted payback formula.
C) Profitability index rate.
D) Internal rate of return.
E) Crossover rate.

Net Present Value

A valuation method that calculates the value of future cash flows in today's dollars by discounting them at a particular rate.

Internal Rate Of Return

The critical interest rate that nullifies the net present value of cumulative cash flows from a project.

Discount Rate

The interest rate charged to banks for borrowing short-term funds directly from the Federal Reserve, or broadly, the interest rate used to discount future cash flows to present value.