The net present value of a proposed investment is negative. Therefore, the discount rate used must be:
A)greater than the project's internal rate of return.
B)less than the project's internal rate of return.
C)greater than the minimum required rate of return.
D)less than the minimum required rate of return.

Question

Quizplus · Accepted Answer

If the net present value (NPV) is negative, it means the discount rate used is greater than the project's internal rate of return (IRR), as the NPV becomes zero when the discount rate equals the IRR.

The Net Present Value of a Proposed Investment Is Negative