Which of the Following Statements Is True

question 60

Multiple Choice

Which of the following statements is true?
(I) If an investment project has an internal rate of return (IRR) equal to the cost of capital,the Net Present Value (NPV) for that project must be greater than 0
(II) If [CF₁ + CF₂ + … + CF_k] > CF₀,then the IRR will always be greater than 0.(CF_k = net cash flow at end of year k)

• A)I & II are true
• B)(I)only
• C)(II)only
• D)Neither statement is true

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Definitions:

Confidence Intervals

A range of values derived from a dataset, estimated to contain the true value of a parameter with a certain probability level.

Time-Series Data

Data collected at successive equally spaced points in time, often used in forecasting and identifying trends.

Confidence Interval

A spectrum of numbers, obtained from sampled evidence, which is expected to encompass the magnitude of an undetermined population statistic.

Standard Deviation

A measure that quantifies the spread of a dataset around its mean, determined by taking the square root of the variance.