If a Net Present Value Analysis for a Normal Project

question 76

Multiple Choice

If a net present value analysis for a normal project gives an NPV greater than zero, an internal rate of return calculation on the same project would yield an internal rate of return ____ the required rate of return for the firm.

• A) greater than
• B) less than
• C) equal to
• D) Cannot be determined from the information given

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Definitions:

Bonds

Fixed-income securities that represent a loan made by an investor to a borrower, typically corporate or governmental.

Interest Accrued

The amount of interest that has accumulated over time but has not yet been paid or charged.

Par Value

The nominal value of a bond or stock as declared by the issuer, which might not represent its actual market value.

Exchange Rate

The price at which one currency can be exchanged for another currency in the foreign exchange market.