A project has a net present value of $1,200 and a project life of four years.Which one of these statements must be true?
A)The project's IRR is less than the required rate of return.
B)The project is expected to return $1,200 in Time 0 dollars over and above the discount rate.
C)The project would also have a positive net present value if Year 4 was omitted.
D)The project's cash inflows exceed its outflows by $1,200 over the four years.
E)The project is expected to return $1,200 in Year 4 dollars over and above the initial investment.

Question

Quizplus · Accepted Answer

A positive net present value (NPV) of $1,200 indicates that the project is expected to generate $1,200 more than the required return, in present value terms, over its life.

A Project Has a Net Present Value of $1,200 and a Project