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**CFA Practice Question**

Given a project with normal cash flows, the point at which the net present value profile intersects the vertical axis is most likely to be the:

A. net present value of the project at a discount rate of zero.

B. internal rate of return of the project.

C. discount rate at which the net present value of the project is zero.

**Explanation:**For a project with normal cash flows, the NPV profile intersects the vertical axis at the point where the discount rate is zero.

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**User Contributed Comments**
4

User |
Comment |
---|---|

mattg |
B and C are the same thing, must be A |

jerasmus |
Arghh! I chose B because I read 'horisontal' axis... |

pporres |
same thing here.... i learnt that every time i see two answers that look like correct or very similar to each other i have to reread the question... most of the times the answer is right there. |

Ifi2703 |
Yep, read the axis part as horizontal too and chose B. I really hope i get my act together and stop making silly mistakes like these on the exam!! |