If in Evaluating a Proposal by Use of the Net

question 189

True/False

If in evaluating a proposal by use of the net present value method there is an excess of the present value of future cash inflows over the amount to be invested, the rate of return on the proposal exceeds the rate used in the analysis.

---

Definitions:

Excess Capacity

The amount of production capability that is not being used by a firm or within an economy.

Excess Capacity

Refers to the situation where a firm is producing at a lower scale of output than it has been designed for.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for competitive pricing and differentiation.

Advertising

A means of communication with the users of a product or service, aimed at promoting or selling a product, service, or idea.