Question:Which two of the following statements about the IRR/NPV methods of investment appraisal are correct?
A. If the net present value of an investment at r% is positive, the NPV will be negative at a rate of s% if s% is less than r%.
B. If the project has conventional cashflows, the graph of the net present value against discount rate has a negative slope.
C. The internal rate of return can be obtained exactly using algebra whereas the graphical method provides only an approximate rate for the IRR.
D. An estimate of the internal rate of return requires the calculation of the net present value at two different discount rates.
The correct answers are:If the project has conventional cashflows, the graph of the net present value against discount rate has a negative slope; An estimate of the internal rate of return requires the calculation of the net present value at two different discount rates.
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