Question

Which of the following statements is​ false?

A.NPV is positive only for discount rates greater than the internal rate of return.
.B.If you are unsure of your cost of capital​ estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
C.To decide whether to invest using the NPV​ rule, we need to know the cost of capital.
D.About​ 75% of firms surveyed used the NPV rule for making investment decisions

Answer 1

The false statement is that NPV is positive only for discount rates greater than the internal rate of return.

Step-by-step explanation:

The false statement among the options is option A: NPV is positive only for discount rates greater than the internal rate of return.

NPV, or Net Present Value, is a financial metric used to determine the profitability of an investment by comparing the present value of cash inflows to the present value of cash outflows, discounted at a given discount rate.

The internal rate of return (IRR) is the discount rate at which the NPV of an investment is equal to zero. NPV can be positive for discount rates both above and below the IRR.