A Project That Just Breaks Even on an Accounting Basis

question 298

True/False

A project that just breaks even on an accounting basis must have a positive NPV.

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Definitions:

Internal Rate of Return

A metric used in capital budgeting to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project zero.

Cost of Capital

The rate of return a business needs to generate in order to meet the demands of its creditors and investors, used in evaluating new projects.

Cash Inflows

Money or other forms of financial assets that come into a company, typically as a result of its business operations or investments.

Cost of Capital

It represents the expense for an organization to fund its operations and investments, typically expressed as a rate of return that the company must achieve to maintain its market value.