A project with a negative NPV always has an IRR that's less than the cost of capital.

Name: A project with a negative NPV always has an IRR that's less than the cost of capital.
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Question

Quizplus · Accepted Answer

A negative NPV means that the project's expected cash inflows are less than the expected cash outflows. This implies that the project is not generating enough returns to cover the cost of capital, hence the IRR must be lower than the cost of capital. Otherwise, the project would have a positive NPV.

A Project with a Negative NPV Always Has an IRR