If the present value of an investment's benefits equals the present value of the investment's costs, then the investor would earn a
A) return equal to the discount rate.
B) negative rate of return.
C) 0% rate of return.
D) return greater than the discount rate.

Question

Quizplus · Accepted Answer

When the present value of an investment's benefits equals the present value of its costs, it means the investment is earning exactly the discount rate used in the present value calculation. This is because the discount rate is the rate of return that equates the present value of the cash inflows (benefits) with the present value of the cash outflows (costs).

If the Present Value of an Investment's Benefits Equals the Present