Scan QR code or get instant email to install app

Skip to content
#
Project X has an internal rate of return (IRR) of 14%. Project Y has an IRR of 17%. Both projects have conventional cash flow patterns (all inflows after the initial cash outflow). If the required rate of return is:

### Related Information

Question:

A
14%, the net present value (NPV) of Project Y will exceed the NPV of Project X.

explanation

We know that at a 14% discount rate, the NPV of Project X is zero and the NPV of Project Y is greater than zero. There is no well-defined relationship between the required race of return and ordinary payback. If Project Y is smaller in size, its NPV may be smaller than that of Project X.

Take more free practice tests for other PASSEMALL topics with our cfa exam prep now!

Comments