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:

Creditors

Individuals, banks, or other entities that lend money or extend credit to others, with the expectation of being repaid, often with interest.

Book Value

A financial metric that represents the net asset value of a company, calculated by subtracting total liabilities from total assets.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the owners' share.

Net Working Capital

The contrast between a corporation's short-term assets and its short-term debts, indicating its immediate financial health.