Discussion
A present worth of zero at the minimum attractive rate of return means the project
Answer: B
Correct answer: earns exactly that rate and no more
A present worth of zero means the discounted receipts exactly cover the discounted outlays at the rate used, so the project returns precisely the minimum attractive rate. It is the break-even case: acceptable but with no margin, and the rate at which it occurs is the project’s internal rate of return.
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