Question

If net present value (NP

  • V of a project is zero at discount rate 10%, IRR is:
A Less than 10% Correct Answer Incorrect Answer
B Equal to 10% Correct Answer Incorrect Answer
C Greater than 10% Correct Answer Incorrect Answer
D Indeterminate Correct Answer Incorrect Answer

Solution

The Internal Rate of Return (IRR) is defined as the discount rate that makes the NPV of a project zero. Therefore, if NPV is zero at 10%, the IRR is 10%.

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