Which method of evaluating capital investment proposals uses the concept of present value to compute a rate of return?

A) average rate of return
B) accounting rate of return
C) cash payback period
D) internal rate of return

Internal Rate of Return

The discount rate that makes the net present value of all cash flows (both positive and negative) from a particular project or investment equal to zero.

Present Value

The present-day value of a future cash sum or cash flow sequence, with a given interest rate.