The net present value of a project is zero. the minimum desired rate of return used to obtain the net present value is 8%. which of the following statements is true? a. the project is desirable if the minimum desired rate of return is 6%. b. the project is undesirable if the minimum desired rate of return is 6%. c. the project is desirable if the minimum desired rate of return is 6% or 10%. d. the project is desirable if the minimum desired rate of return is 10%.

A. The project is desirable if the minimum desired rate of return is 6%.

Explanation:

If the NPV of a project is zero at an 8% rate it means it yields 8%

Remember:

PV = net cash flow at present value using a given rate - investment

So if PV = 0 then

net cash flow at given the rate = investment

Which makes the business profitable at that rate.

So if the desired minimum is 6% the project yields above that. Making it profitable and therefore, desirable

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