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The internal rate of return: Question 5 options: 1) 2) 3) 4) 1) will always exce

ID: 2785894 • Letter: T

Question

The internal rate of return:

Question 5 options:

1)

2)

3)

4)

1)

will always exceed the discount rate employed to calculate the net present value.

2)

will exceed the discount rate used to calculate net present value only when the net present value is less than zero.

3)

will exceed the discount rate used to calculate net present value only when the net present value is equal to zero.

4)

will exceed the discount rate used to calculate net present value only when the net present value is greater than zero.

Explanation / Answer

will exceed the discount rate used to calculate net present value only when the net present value is greater than zero.

the 4th option

the above is the answer

because NPV=0 at IRR, so it should be higher than discount rate to make it 0 from higher than zero.

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