IRR is defined as:

The Internal Rate of Return (IRR) is a popular capital budgeting metric used to evaluate the attractiveness of a project or investment. It is closely related to the Net Present Value (NPV) concept. The correct answer is Discount rate with zero NPV.

• The Internal Rate of Return (IRR) (A) is precisely defined as the discount rate that makes the Net Present Value (NPV) of all cash flows from a particular project equal to zero. In essence, it's the rate of return an investment is expected to generate. If the IRR is higher than the company's required rate of return (cost of capital), the project is typically considered acceptable.
• Interest rate charged (B) refers to the cost of borrowing money, which is a component of a company's cost of capital, but not the definition of IRR.
• Simple rate of return (C) is a vague term; IRR is a specific, sophisticated measure that accounts for the time value of money.
• Average return (D) is too general. While IRR represents a project's effective return, its definition is specifically tied to the zero-NPV condition.