Question text You are considering a project but you realize this project has a n

Question

Question text You are considering a project but you realize this project has a net present value of zero. Based on this info, which of the following is true? Select one:

a. the total of the cash inflows must equal the initial cost of the project.

b. the project earns a return exactly equal to the discount rate.

c. a decrease in the project's initial cost will cause the project to have a negative NPV d. any delay in receiving the projected cash inflows will cause the project to have a positive NPV. e. the project's PI must be also be equal to zero.

Explanation / Answer

b. the project earns a return exactly equal to the discount rate.

At Zero npv Net present value of cash inflow is equal to net present value of cash outflow. At this discount rate npv is zero. this is the IRR of the project.

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