A project costs $101,000 today and is expected to generate cash flows of $31,000 per year for the next 15 years. At what rate is the NPV equal to zero?
A) 30.10%
B) 29.83%
C) 22.47%
D) 31.38%

Question

Quizplus · Accepted Answer

The correct answer is A because the NPV is equal to zero when the discount rate is equal to the internal rate of return (IRR). The IRR is the rate at which the present value of the cash flows is equal to the initial investment. In this case, the IRR is 30.10%.

A Project Costs $101,000 Today and Is Expected to Generate