What is the interest rate at which the present worth of cash flow on a project equals zero?

The correct choice is the rate of return, as it represents the interest rate at which the present worth of future cash flows from a project equals zero. This concept is fundamental in engineering economics, where the cash inflows and outflows are analyzed to determine the viability of a project.

In practicality, the rate of return is the discount rate that makes the net present value (NPV) of all cash flows from the project equal to zero. When the NPV is zero, it indicates that the project is expected to break even in terms of present value. This is a critical point for decision-making, as projects yielding a rate of return greater than this threshold are typically considered profitable, while those below it would be viewed as less desirable.

This concept directly relates to assessing investment opportunities and ensuring that the chosen project aligns with financial goals. Understanding how to accurately calculate and interpret the rate of return enables intelligent investment decisions based on projected cash flows.

The other options are related but do not specifically match the definition provided in the question. The effective rate generally refers to the actual interest earned on an investment after compounding, while the nominal rate indicates the stated interest rate without adjustment for inflation or compounding effects. Yield typically refers to the income return on an investment,