calculates that a project with conventional cash flows and a required return of 14% has a negative NPV. What do we then know about the project's internal rate of return? A) equal to 21% B) greater than 14% C) less than 14% D) equal to zer

calculates that a project with conventional cash flows and a required return of 14% has a negative NPV. What do we then know about the project's internal rate of return? A) equal to 21% B) greater than 14% C) less than 14% D) equal to zer

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 2P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

ZLY calculates that a project with conventional cash flows and a required return of 14% has a negative NPV. What do we then know about the project's internal rate of return?

A) equal to 21%

B) greater than 14%

C) less than 14%

D) equal to zero

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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