**Question:**

A project has a net present value of zero. Which one of the following best describes this project?

The project has a zero percent rate of return.

The project requires no initial cash investment.

The project has no cash flows.

The summation of all of the project’s cash flows is zero.

The project’s cash inflows equal its cash outflows in current dollar terms.

**Answer:**

NPV = Present value of cash flows – Present value of cash outflows.

Therefore if , NPV is Zero then,

0 = Present valule of cash inflows – Present value casn outflows

Present value of cash inflows = Present value of cash outflows.

From the above expresstion we can say that, If NPV is Zero, Then The project cash inflows equal its cash outflows in current dollar terms.

Therefore 5th option is correct.