Certified Professional In Financial Management (CPFM)

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A company is evaluating a capital investment project with a positive Net Present Value (NPV). Which of the following statements is the most accurate interpretation of this result?

The project's internal rate of return (IRR) is less than the company's cost of capital. The project is expected to generate returns at a rate exactly equal to the required rate of return. The project's payback period is shorter than the company's maximum acceptable payback period. The project is expected to generate returns at a rate greater than the company's required rate of return.

Correct Answer:

The project is expected to generate returns at a rate greater than the company's required rate of return.

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