If the required return is zero, then:
A) The payback period exceeds the discounted payback period.
B) The NPV equals the difference between the undiscounted future cash ﬂows and the initial cost.
C) If the NPV is negative, the IRR will be greater than zero.
D) The PI will be less than one.
E) The project will be acceptable according to the AAR criteria.

Question

Quizplus · Accepted Answer

When the required return is zero, then the NPV equals the difference between the undiscounted future cash flows and the initial cost. This is because there is no discounting of the cash flows when the required return is at zero.

If the Required Return Is Zero, Then