If the Net Present Value of the Investment Is $8,510

question 40

Multiple Choice

If the net present value of the investment is $8,510, then:

• A)the rate of return is less than the cost of capital.
• B)the present value of the cash flows is greater than the required investment.
• C)the cost of capital is higher than the internal rate of return.
• D)the present value of the cash flows is $8,510 less than the investment.

---

Definitions:

Foreclosures

The legal process by which a lender takes control of a property, evicts the homeowner, and sells the home after the homeowner fails to make full principal and interest payments on a loan.

Banks

Financial institutions that accept deposits, offer loans, and provide a wide range of financial services to individuals and businesses.

Bubble

An economic condition characterized by the rapid escalation of asset prices followed by a contraction when the price increases are not supported by fundamentals.

Housing Prices

denote the value assigned to residential properties and homes, which fluctuate based on factors like location, demand, economic conditions, and interest rates.