Joan Osborne Is Evaluating a Potential Capital Investment

question 148

Multiple Choice

Joan Osborne is evaluating a potential capital investment.She has calculated the net present value using a minimum rate of return of 10%.Using this rate,the net present value is negative.What does this tell her about the rate of return expected for the project?

• A) If the net present value is negative, the expected rate of return for the project is greater than the 10% minimum or required rate of return.
• B) If the net present value is negative, the expected rate of return for the project is less than the 10% minimum or required rate of return.
• C) If the net present value is negative, the expected rate of return for the project is equal to the 10% minimum or required rate of return.
• D) None of these answers are correct.

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Definitions:

Arterioles

Small branches of arteries leading to capillaries that regulate blood flow and pressure in the circulatory system.

Arterial Wall

The layered structure of an artery, consisting of connective tissue, smooth muscle, and endothelial cells, which maintain blood pressure and circulation.

Capillaries

The smallest blood vessels in the body's vascular system, involved in the exchange of water, oxygen, carbon dioxide, and other nutrients and waste substances between blood and tissues.

Endothelium

A thin layer of cells that lines the interior surface of blood vessels and lymphatic vessels, forming an interface between circulating blood or lymph in the lumen and the rest of the vessel wall.