Which of the following statements is most likely correct for a project costing $50,000 and returning $14,000 per year for 5 years?
A) NPV = $3,071.01.
B) NPV = $20,000.
C) IRR = 2.8%.
D) IRR is greater than 10%.

Question

Quizplus · Accepted Answer

The IRR (Internal Rate of Return) is the discount rate that makes the NPV (Net Present Value) of the cash flows from the project equal to zero. Given the cash flows, the IRR is likely greater than 10%, as the project returns $14,000 annually for 5 years on a $50,000 investment.

Which of the Following Statements Is Most Likely Correct for a Project