Borrowing and lending projects usually can be distinguished by whether:
A) they have positive or negative IRRs.
B) the time-zero cash flow is positive or negative.
C) their IRR increases as the discount rate increases.
D)their rate of return is high or low.

Question

Quizplus · Accepted Answer

The time-zero cash flow is the initial investment for the project. If it is positive, then it is a borrowing project because the borrower is receiving funds. If it is negative, then it is a lending project because the borrower is providing funds. The other options are not applicable in distinguishing borrowing and lending projects.

Borrowing and Lending Projects Usually Can Be Distinguished by Whether