If an investment project has an internal rate of return equal to the required rate of...

Question

Question

If an investment project has an internal rate of return equal to the required rate of return, the NPV for the project:

A. may be either positive or negative

B. is positive

C. cannot be determined

D. is zero

E. is negative

Answer 1

Answer #1

By the definition of IRR only, we know that IRR is that discount rate which makes the NPV (net Present value) of all cashflows equal to zero.

Hence, if required rate of return (WACC) is equal to IRR, then NPV of the project will be ZERO (option D).

Answer 2

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