Discussion
Assertion: the internal rate of return and present worth criteria always agree for a single project. Reason: a positive present worth at the required rate implies the project earns more than that rate.
Answer: C
Correct answer: both the assertion and the reason are true and the reason explains the assertion
Both are true and the reason gives the mechanism. For a conventional cash flow the present worth decreases monotonically with the discount rate and crosses zero once. A positive present worth at the required rate therefore places that rate to the left of the crossing, which is to say below the internal rate - the two criteria are two readings of the same curve.
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