When the net present value for a project is negative, the internal rate of return is _________ the cost of capital.

Question

Quizplus · Accepted Answer

When the net present value is negative, it means that the project is expected to generate a return that is less than the cost of capital. Thus, the internal rate of return (IRR) must be lower than the cost of capital, as the IRR represents the discount rate at which the net present value equals zero. Therefore, the correct choice is C, less than.

When the Net Present Value for a Project Is Negative