The net present value of a project is zero. The minimum desired rate of return used...
The net present value of a project is zero. The minimum desired rate of return used to obtain the net present value is 8%. Which of the following statements is TRUE?
Group of answer choices
a)The project is desirable if the minimum desired rate of return is 10%.
b) The project is desirable if the minimum desired rate of return is 6%.
c) The project is desirable if the minimum desired rate of return is 6% or 10%.
d) The project is undesirable if the minimum desired rate of return is 6%.
Homework Answers
Answer : b) The project is desirable if the minimum desired rate of return is 6%.
Explanation: Lower minimum desired rate of return will results in higher NPV. At 8 % the net present value of a project is zero thus at 6 %, the NPV will be greater than zero(ie positive figure) making the project is desirable.
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