Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is____________?
Correct answer: A. Positive
- A. Positive
- B. Negative
- C. Zero
- D. One
Explanation
When a project’s NPV is positive, its expected return exceeds the cost of capital; under the usual assumptions, its MIRR will therefore also exceed that cost. A zero NPV indicates equality, while a negative NPV indicates an inferior return.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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