Asked by Daria Matvienko on May 04, 2024
Verified
If a company's required minimum rate of return is 9% and in using the net present value method a project's net present value is zero this indicates that the
A) project's rate of return exceeds 9%.
B) project's rate of return is less than the minimum rate required.
C) project earns a rate of return of 9%.
D) project earns a rate of return of 0%.
Net Present Value
The Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time, often used to assess the profitability of an investment.
Minimum Rate
The lowest acceptable rate of return on an investment, often used in the evaluation of projects or financial decisions.
Rate of Return
The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.
- Familiarize yourself with the foundational principles of the net present value method and its usage in analyzing divergent investment projects.
- Attain knowledge on how to evaluate and elucidate the internal rate of return and its significance on investment appeal.
Verified Answer
Learning Objectives
- Familiarize yourself with the foundational principles of the net present value method and its usage in analyzing divergent investment projects.
- Attain knowledge on how to evaluate and elucidate the internal rate of return and its significance on investment appeal.
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