When a Capital Budgeting Project Generates a Positive Net Present

question 1

Multiple Choice

When a capital budgeting project generates a positive net present value, this means that the project earns a return higher than the

• A) internal rate of return.
• B) annual rate of return.
• C) required rate of return.
• D) profitability index.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business.

Withdraw

The act of removing funds from an account, typically from a bank or investment.

Investment

Allocation of resources, usually money, into a vehicle expected to generate income or profit, such as stocks, bonds, or real estate.

Return on Investment

A measure of the financial gain or profitability of an investment relative to its cost, expressed as a percentage.