The NPV is positive when using a specific interest rate,The IRR will be greater than that interest rate used.

Question

Quizplus · Accepted Answer

This is a fundamental concept of capital budgeting. The NPV is positive when the present value of cash inflows exceeds the present value of cash outflows, which happens when the discount rate (or interest rate) used is lower than the project's IRR. In other words, the IRR is the break-even interest rate that makes the NPV equal to zero. If the interest rate used is higher than the IRR, the NPV will be negative.

The NPV Is Positive When Using a Specific Interest Rate,The