The net present value of a project is zero.The minimum desired rate of return used to obtain the net present value is 8%.Which of the following statements is TRUE?
A)The project is desirable if the minimum desired rate of return is 10%.
B)The project is desirable if the minimum desired rate of return is 6%.
C)The project is desirable if the minimum desired rate of return is 6% or 10%.
D)The project is undesirable if the minimum desired rate of return is 6%.

Question

Quizplus · Accepted Answer

If the NPV is zero at an 8% rate of return, the project will have a positive NPV at any rate lower than 8%, making it desirable at a 6% rate.

The Net Present Value of a Project Is Zero