When a project's internal rate of return equals the discount rate,

Question

Quizplus · Accepted Answer

When a project's internal rate of return equals the discount rate, the net present value is zero. This means that the project will neither add nor subtract value from the company, and therefore the decision to invest in the project is neutral. It does not necessarily mean that the manager has manipulated the analysis, nor does it indicate anything about the industry average discount rate.

When a Project's Internal Rate of Return Equals the Discount