If an Investment Has a Positive Net Present Value,the

question 57

Multiple Choice

If an investment has a positive net present value,the

• A)internal rate of return is higher than the discount rate.
• B)discount rate is higher than the hurdle rate of return.
• C)internal rate of return is lower than the discount rate of return.
• D)hurdle rate of return is higher than the discount rate.

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Definitions:

Price Takers

Price Takers are firms or individuals that accept the market price as given, with no influence over it, typically in markets with many sellers and buyers.

Economic Profits

The difference between a firm’s total revenue and its total costs, including both explicit and implicit costs, indicating the financial success beyond breaking even.

Profit-maximizing Firm

A business whose goal is to achieve the highest possible financial gain by adjusting production and pricing strategies based on market conditions.

Price-taker Market

A market situation where individual sellers or buyers have no influence over the price of a product, accepting the prevailing market price as given.