If the net present value of a project is zero,based on a discount rate of 16%,which of the following statements about the project's internal rate of return is correct?
A) It is equal to 16%.
B) It is less than 16%.
C) It is greater than 16%.
D) It cannot be determined from the information given.

Question

Quizplus · Accepted Answer

If the net present value of a project is zero, it means that the project's discounted cash flows are equal to the initial investment. Therefore, the internal rate of return (IRR) of the project is equal to the discount rate at which the NPV is zero. In this case, the discount rate is 16%, so the IRR of the project is also 16%.

If the Net Present Value of a Project Is Zero,based