Question 501 NPV, IRR, pay back period
The below graph shows a project's net present value (NPV) against its annual discount rate.
Which of the following statements is NOT correct?
(a) When the project's discount rate is 18% pa, the NPV is approximately -$30m.
(b) The payback period is infinite, the project never pays itself off.
(c) The addition of the project's cash flows, ignoring the time value of money, is approximately $20m.
(d) The project's IRR is approximately 5.5% pa.
(e) As the discount rate rises, the NPV falls.
Copyright © 2014 Keith Woodward