A Project with a Negative NPV Always Has an IRR

question 30

True/False

A project with a negative NPV always has an IRR that's less than the cost of capital.

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Definitions:

Unit Contribution Margin

This is the difference between the selling price per unit and the variable cost per unit. It indicates how much each unit sold contributes to fixed costs and profit.

Fixed Expenses

Constant costs incurred by a business, irrespective of the level of goods or services produced.

CVP Graph

A visual representation of the Cost-Volume-Profit analysis that illustrates the relationship between total costs, total sales, and the number of units produced or sold.

Break-even Point

The point where a business's total costs and total revenues are the same, leading to neither a profit nor a loss.