When a project's internal rate of return equals its opportunity cost of capital,then:
A) the project should be rejected.
B) the project has no cash inflows.
C) the net present value will be positive.
D)the net present value will be zero

Question

Quizplus · Accepted Answer

When a project's internal rate of return equals its opportunity cost of capital, the net present value will be zero. This means that the project is expected to generate a return that is equal to the cost of capital used to finance it, making it just break even. Therefore, it is neither a good nor a bad investment, and the decision to accept or reject the project should be based on other factors such as strategic fit, risk, and managerial considerations.

When a Project's Internal Rate of Return Equals Its Opportunity