If the Internal Rate of Return Is Less Than the Discount

question 156

Multiple Choice

If the internal rate of return is less than the discount rate, then the net present value of a project is

• A)positive.
• B)negative.
• C)zero.
• D)one.

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable.

Preferred Stockholders

Investors who own shares that typically do not have voting rights but have a higher claim on assets and earnings than common stockholders, such as receiving dividends before them.

Liquidation Proceeds

The funds that are received as a result of liquidating, or selling off, a company's assets, typically occurring during bankruptcy or when a company closes.

Tax Deductible

Expenses that can be subtracted from gross income to reduce the amount of income subject to tax.