A project that has a projected IRR of negative 100 percent will also have a(n):
A) discounted payback period equal to the life of the project.
B) operating cash flow that is positive and equal to the depreciation.
C) net present value that is negative and equal to the initial investment.
D) payback period that is exactly equal to the life of the project.
E) net present value that is equal to zero.

Question

Quizplus · Accepted Answer

A project with a projected IRR of negative 100 percent means that the project's cost of capital is greater than the expected return, resulting in a negative net present value (NPV) that is equal to the initial investment. Therefore, the correct choice is C - the net present value is negative and equal to the initial investment.

A Project That Has a Projected IRR of Negative 100