The correct answer is: B. internal rate of return
The internal rate of return (IRR) is the rate of return that makes the net present value of a project equal to zero. It is a measure of the profitability of a project and is used in capital budgeting to compare the profitability of different projects.
The external rate of return (ERR) is the rate of return that a project must earn in order to be acceptable to investors. It is calculated by taking the discount rate that investors are willing to accept and subtracting the project’s risk premium.
A positive rate of return is a return on investment that is greater than zero. This means that the project is generating more money than it is costing to operate.
A negative rate of return is a return on investment that is less than zero. This means that the project is costing more money to operate than it is generating.
In capital budgeting, an internal rate of return of project is classified as its internal rate of return. This is because the IRR is a measure of the profitability of a project and is used in capital budgeting to compare the profitability of different projects.