Question

The rate at which present value of cash inflow become equal to present value of cash of cash outflow is called

Answer 1

The rate at which cash inflows isequal to the cash outflows is called as the Internal Rate of Return. The Internal Rate of Return method is a discounted rate used for analysing the profitability of a project. It is therate at which the current value of returns from a project minus the costs involved is zero.

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Answer 2

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CASH IN FLOW

• It means that cash is going into the company.
• E.g : Receipt of a bank loan, Interest on savings and Investments and Shareholder investments etc

CASH OUT FLOW

• It means cash is going out of the company.
• E.g: Purchase of stock, Raw materials or tools, Wages, Rents and Daily operating expenses, Dividend payments, Income tax etc