Jackson Company is using the net present value method. If a company\'s required
ID: 2497527 • Letter: J
Question
Jackson Company is using the net present value method. If a company's required rate of return is 12% and a project's net present value is zero, this indicates that the
project earns a rate of return of 0%.
Project earns a rate of return of 12%.
project's rate of return is less than the minimum rate required.
project's rate of return exceeds 12%.
project earns a rate of return of 0%.
Project earns a rate of return of 12%.
project's rate of return is less than the minimum rate required.
project's rate of return exceeds 12%.
Explanation / Answer
Solution:
When NPV = O, it means, present value of outflows = present value of inflows.
Further, it means, that the project will earn the required return of 12 % as per required by the discounting factor.
Thus, answer to the question is -
project earns a rate of return of 12 %.
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