Question

In: Finance

If a project's net present value (NPV) is positive, its internal rate of return (IRR) must...

If a project's net present value (NPV) is positive, its internal rate of return (IRR) must be ______ the firm's required rate of return (r)

a. less than

b. greater than

c. equal to

Solutions

Expert Solution

if NPV is positive, IRR must be less than the firm required rate of return.

IRR is the discount rate at which NPV = 0

if NPV is positive the internal rate of return is less than the required rate of return.

it is proved by the following example in the image file

jeff jeffy answered 2 years ago
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