If the NPV (Net Present Value)of a project with one sign reversal is positive,then the project's IRR (Internal Rate of Return)________ the required rate of return.
A) must be less than
B) must be greater than
C) could be greater or less than
D) The project's IRR cannot be determined without actual cash flows.

Question

Quizplus · Accepted Answer

If the NPV is positive with one sign reversal, it means that the project's cash inflows are greater than its outflows, and the required rate of return is being met. In this situation, the IRR must be greater than the required rate of return for the NPV to be positive. Therefore, the answer is B - the project's IRR must be greater than the required rate of return.

If the NPV (Net Present Value)of a Project with One