Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be_________?
Correct answer: B. Zero
- A. Negative
- B. Zero
- C. Positive
- D. Independent
Explanation
When a project's discounted cash inflows exactly recover the invested capital at the required rate of return, its net present value is zero. A positive NPV would mean value is created beyond that required return.
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About Business Finance
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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