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

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- 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. Get Finance homework help today