If a project has a positive net present value,its internal rate of return will exceed the firm's hurdle rate.

Question

Quizplus · Accepted Answer

A positive net present value implies that the project's expected cash inflows exceed its expected cash outflows, which means that the project generates enough returns to exceed the firm's required rate of return (or hurdle rate). And since the internal rate of return is the discount rate that makes the NPV of the project equal zero, it must be higher than the hurdle rate to yield a positive NPV. Therefore, if a project has a positive NPV, its IRR will exceed (not equal) the firm's hurdle rate.

If a Project Has a Positive Net Present Value,its Internal