The firm has computed the net present value of the two-period project to be negative. What does this mean about the internal rate of return?

Question

Quizplus · Accepted Answer

When the net present value (NPV) of a project is negative, it means that the present value of the project's cash flows is less than the initial investment. This implies that the internal rate of return (IRR), which is the discount rate that makes the NPV equal to zero, is lower than the discount rate used in the NPV calculation.

The Firm Has Computed the Net Present Value of the Two-Period