Which of the following is FALSE for a project whose NPV equals zero? A. The proj
ID: 2728471 • Letter: W
Question
Which of the following is FALSE for a project whose NPV equals zero?A. The projects cash outflows are equal to the present value of the cash inflows B. The project has an actual (or internal) rate of return that is less than the required return C. The project will have no impact on firm value D. The IRR is equal to the required rate of return Which of the following is FALSE for a project whose NPV equals zero?
A. The projects cash outflows are equal to the present value of the cash inflows B. The project has an actual (or internal) rate of return that is less than the required return C. The project will have no impact on firm value D. The IRR is equal to the required rate of return Which of the following is FALSE for a project whose NPV equals zero?
A. The projects cash outflows are equal to the present value of the cash inflows B. The project has an actual (or internal) rate of return that is less than the required return C. The project will have no impact on firm value D. The IRR is equal to the required rate of return
Explanation / Answer
Answer is “B. The project has an actual (or internal) rate of return that is less than the required return.”
The internal rate of return of a project is the rate at which the net present value of the project is equal to zero. For a project whose NPV is zero, required rate of return must be equal to its actual (internal rate of return).
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