Internal rate of return is the discount rate that______________ A. NPV > 0 B. is

ID: 2733246 • Letter: I

Question

Internal rate of return is the discount rate that______________

A. NPV > 0

B. is higher than the cost of capital.

C. makes the NPV of an investment = 0

D. makes the future value of all cash flows >0.

E. is higher than firm ROE.

The incorrect statement about NPV is_______________.

A. Initial cost often is CF0 and is an outflow

B. Net present value is the difference between an investment project’s market value and its cost.

C. An investment should be accepted if the net present value is positive and rejected if it is negative.

D. NPV > 0 means the investment is expected to increase firm net income.

E. NPV is a direct measure of how well an investment project will meet the goal of

Answer: C. makes the NPV of an investment = 0

Because At IRR NPV is equal to 0.

Answer: D. NPV > 0 means the investment is expected to increase firm net income.

Because all other statement are correct.

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