If the net present value for a capital investment is equal to zero,the internal rate of return for the investment is equal to the required rate of return.

Question

Quizplus · Accepted Answer

When the net present value (NPV) of a capital investment is zero, it means that the investment is expected to generate just enough cash flows to cover the cost of the initial investment and the required rate of return. This is also referred to as the breakeven point. At this point, the internal rate of return (IRR) of the investment is equal to the required rate of return, since the cash flows generated by the investment are exactly enough to cover the cost of capital. Therefore, the statement is true.

If the Net Present Value for a Capital Investment Is