24. Which of the following statements is true of a project with a positive net p
ID: 2800671 • Letter: 2
Question
24. Which of the following statements is true of a project with a positive net present value (NPV)?
a.
The project's internal rate of return is less than the expected rate of return.
b.
The project has multiple internal rates of return.
c.
The project's terminal value is less than the future value of the initial investment in the project.
d.
The project's initial investment is recovered on a present value basis prior to the end of the project's useful life.
e.
The present value of project's cash inflows and multiple cash outflows discounted at internal rate of return are equal.
24. Which of the following statements is true of a project with a positive net present value (NPV)?
a.
The project's internal rate of return is less than the expected rate of return.
b.
The project has multiple internal rates of return.
c.
The project's terminal value is less than the future value of the initial investment in the project.
d.
The project's initial investment is recovered on a present value basis prior to the end of the project's useful life.
e.
The present value of project's cash inflows and multiple cash outflows discounted at internal rate of return are equal.
Explanation / Answer
If a project's NPV is positive, it means
a) The IRR of the project > Cost of capital of the project
b) The initial investment of the project is recovered before the end of the useful life of the project
c) The project may not have multiple IRRs as Multiple IRRs occur when there is a negative cashflow after a positive cashinflow during the life of the project
d) The terminal value of the project is more than the future value of the initial investment.
So, the answer is Option D
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.