The net present value of a project is zero.The minimum desired rate of return used to obtain the net present value of zero 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 net present value (NPV) of a project is zero at an 8% discount rate, it means the project's return is exactly 8%. Therefore, if the minimum desired rate of return is lower than 8% (e.g., 6%), the project is considered desirable because it exceeds the required return.

The Net Present Value of a Project Is Zero