If the Net Present Value (NPV) of an Investment Is

question 29

Multiple Choice

If the net present value (NPV) of an investment is zero, then the internal rate of return (IRR) is:

• A) less than the discount rate.
• B) more than the discount rate.
• C) equal to the discount rate.
• D) negative.

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Definitions:

Present Value

The valuation today of a future financial sum or series of cash movements, taking into account a predetermined return rate.

Future Value

The estimated value of a current asset or amount of money at a specified date in the future, taking into account factors like interest rates or stock growth.

Present Value

The present-day valuation of a future sum of money or cash flow series, assuming a particular rate of earnings.

Compound Interest

Interest that is computed on both the original principal amount and the interest that has been added to it from past periods, for either a loan or deposit.