When a Project's Internal Rate of Return Equals Its Opportunity

question 68

Multiple Choice

When a Project's internal rate of return equals its opportunity cost of capital, then:

• A)the project should be rejected.
• B)the project has no cash inflows.
• C)the net present value will be positive.
• D)the net present value will be zero.

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Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.

Absolute Advantage

The ability of a country or individual to produce a good more efficiently than another entity with the same resources.

Trade Deficit

The circumstance where a country's imports outpace its exports, causing a negative trade balance.

Trade Surpluses

Trade surpluses occur when a country's exports exceed its imports over a given period, indicating a net inflow of domestic currency from foreign markets.