For a project with normal cash flows, if IRR = the required return (discount rate), then...

Question

Question

For a project with normal cash flows, if IRR = the required return (discount rate), then NPV = 0, and the profitability index = 1.0.

Group of answer choices

True

False

Answer 1

Answer #1

True

Because when IRR = cost of capital PV of positive CF = PV of negative CF

Answer 2

Similar Homework Help Questions

Assume the required rate of return is 12 percent Year Cash Flows 0 &

Assume the required rate of return is 12 percent Year Cash Flows 0 - $144,000 1 $33,000 2 $46,000 3 $58,000 4 $72,000 -What is the NPV of the above cash flows - What is the IRR -What is the Profitability Index -What is the payback period of the project -What is the discounted payback period
What is the internal rate of return (IRR) of a project that has the following cash...

What is the internal rate of return (IRR) of a project that has the following cash flows? The required return is 10.0%. Year Cash Flow 0 $ (12,000) 1 $ 3,000 2 $ 3,000 3 $ 3,000 4 $ 3,000 5 $ 3,000 6 $ 3,000 Group of answer choices 12.98% None of these are correct. 14.55% 7.69% 10.19%
What is the internal rate of return (IRR) of a project that has the following cash...

What is the internal rate of return (IRR) of a project that has the following cash flows? The required return is 10.0%. Year Cash Flow 0 $ (12,000) 1 $ 3,000 2 $ 3,000 3 $ 3,000 4 $ 3,000 5 $ 3,000 6 $ 3,000 Group of answer choices None of these are correct. 12.98% 10.19% 14.55% 7.69% PreviousNext

Which of the following statements is most correct? Group of answer choices If a project with...

Which of the following statements is most correct? Group of answer choices If a project with normal cash flows has an IRR, which exceeds the cost of capital (required rate of return), then the project must have a positive NPV. If the IRR of Project A exceeds the IRR of Project B, then Project A must also have a higher NPV. Assuming a project has normal cash flows, the NPV will be positive if the IRR is less than the...
The net present value (NPV) method implicitly assumes that the rate at which cash flows can...

The net present value (NPV) method implicitly assumes that the rate at which cash flows can be reinvested is the required rate of return, whereas the internal rate of return (IRR) method implies that the firm has the opportunity to reinvest at the project's IRR. Group of answer choices False True
True or false and why? 5. The internal rate of return (IRR) is such a discount...

True or false and why? 5. The internal rate of return (IRR) is such a discount rate that ensures the sum of present value of the cash outflows (or costs) with the sum of future value of the cash inflows. 6. A basic rule in capital budgeting is that if a projects NPV is larger than or equal to its IRR, then the project should be accepted.

8) Project A has an internal rate of return (IRR) of 15 percent. Project B has...

8) Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent. Both projects have a required retum of 12 percent. Which of the following statements is MOST correct? A) Project A must have a higher NPV than Project B. B) Both projects have a positive net present value (NPV) C) Project B has a higher profitability index than Project A. D) If the required return were less than 12 percent,...
18. Which of the following is NOT true about the internal rate of return: A) A...

18. Which of the following is NOT true about the internal rate of return: A) A good project is one with IRR greater than the required return. B) IRR is the discount rate that results in a zero net present value for the project. C) Crossover rate for two projects is the IRR of the project with the difference of the cash flows of the two projects.. D) For two projects of the same size, IRR will usually choose the...
Given the following cash flows for a capital project, calculate the NPV and IRR. The required...

Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of return is 8 percent Cash Flows Year 0$-50825 Year 1 $18550 Year 2 $11350 Year 3 $20900 Year 4 $9200 Year 5 $4250

The dividend discount model uses the dividend growth rate to discount the cash flows. Group of...

The dividend discount model uses the dividend growth rate to discount the cash flows. Group of answer choices True or False