Consider a project lasting one year which costs X in year zero and generates a cash flow of Y in year one The project has an internal rate of return of 10 This means that If the appropriate market interest rate is less than 10 , then the project has a negative NPV The NPV of the project is X Y 1 1 If the appropriate market interest rate is greater than 10 , then the project has a positive NPV If the appropriate market interest rate is greater than 10 , then the project has a negative NPV

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Question: Consider a project lasting one year which costs X in year zero and generates a cash flow of Y in year one. The project has

Consider a project lasting one year which costs X in year zero and generates a cash flow of Y in year one. The project has an internal rate of return of 10%. This means that

If the appropriate market interest rate is less than 10%, then the project has a negative NPV
The NPV of the project is X-Y/1.1
If the appropriate market interest rate is greater than 10%, then the project has a positive NPV
If the appropriate market interest rate is greater than 10%, then the project has a negative NPV

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