If a Project Has a Negative Net Present Value, the Internal

question 127

Multiple Choice

If a project has a negative net present value, the internal rate of return will be

• A) less than the discount rate.
• B) greater than the discount rate.
• C) equal to the discount rate.
• D) a negative rate of return.

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Definitions:

Conditional Probability

The estimated probability of an event's occurrence when it is already known that another event has preceded it.

Thomas Bayes

An 18th-century British statistician and clergyman known for formulating the Bayes' Theorem, which describes the probability of an event based on prior knowledge.

Likelihood Probabilities

Quantifies the chance of a particular set of outcomes under specific model parameters, often used in statistical inference.

Prior Probabilities

The probabilities assigned to outcomes based on prior knowledge before any new evidence is considered.