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When NPV Equals Zero

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Which one of the following is FALSE for a project whose NPV equals zero?

1) The project earns more than the required return.

2) The projects cash outflows are equal to the present value of the cash inflows.

3) The project will have no impact on firm value.

4) The IRR is equal to the required rate of return

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Solution Summary

The solution determines which of the given statements are true or false for a project whose NPV equals zero.

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When doing these questions, note that the rate (usually called r) can mean different things, such as required rate of return, IRR and cost of capital, depending on the ...

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  • MSc, California State Polytechnic University, Pomona
  • MBA, University of California, Riverside
  • BSc, California State Polytechnic University, Pomona
  • BSc, California State Polytechnic University, Pomona
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