An Investment Project Has a Positive Net Present Value

question 46

Multiple Choice

An investment project has a positive net present value.The internal rate of return is:

• A) less than the cost of capital.
• B) greater than the cost of capital.
• C) equal to the cost of capital.
• D) indeterminate; it depends on the length of the project.

---

Definitions:

ROEs

ROEs, or Return on Equity, measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

Book Value

The value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus any depreciation.

Extraordinary Gains

Gains that arise from events that are both unusual and infrequent, not expected to recur regularly in the normal course of business.

Value-Irrelevant Earnings

Earnings that have no impact on the market price of a company's stock.