CFA Practice Question

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.

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!!
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