If a Capital Expenditure Project Has an Expected 20% Internal

question 90

Multiple Choice

If a capital expenditure project has an expected 20% internal rate of return, and a $10,000 net present value, and one cash flow sign change, then which one of the following statements about the project is true?

• A) The discount rate used to calculate NPV is greater than 20%
• B) The project has another internal rate of return in addition to the 20% rate mentioned above
• C) In the internal rate of return calculation, the project's cash inflows are assumed to be reinvested at the firm's required rate of return
• D) None of these is correct

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