Which one of the following statements is correct? a.) The net present value is a

ID: 2758126 • Letter: W

Question

Which one of the following statements is correct?

a.) The net present value is a measure of profits expressed in today's dollars.

b.) The net present value is positive when the required return exceeds the internal rate of return.

c.) If the initial cost of a project is increased, the net present value of that project will also increase.

d.) If the internal rate of return equals the required return, the net present value will equal zero.

e.) Net present value is equal to an investment's cash inflows discounted to today's dollars.

Answer: d.) If the internal rate of return equals the required return, the net present value will equal zero.

Because IRR=K than NPV is zero.

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