A project has a net present value of zero. Which one of the following best describes this project?
A) The project has a zero percent rate of return.
B) The project requires no initial cash investment.
C) The project has no cash flows.
D) The summation of all of the project's cash flows is zero.
E) The project's cash inflows equal its cash outflows in current dollar terms.

Question

A project has a net present value of zero. Which one of the following best describes this project?
A) The project has a zero percent rate of return. 
B) The project requires no initial cash investment. 
C) The project has no cash flows. 
D) The summation of all of the project's cash flows is zero. 
E) The project's cash inflows equal its cash outflows in current dollar terms.

Quizplus · Accepted Answer

A net present value (NPV) of zero indicates that the present value of a project's cash inflows equals the present value of its cash outflows, taking into account the time value of money. This means the project is expected to break even, considering the cost of capital.

A Project Has a Net Present Value of Zero