When the Net Present Value Is Negative, the Internal Rate

question 56

Multiple Choice

When the net present value is negative, the internal rate of return is __________ the cost of capital.

• A) greater than
• B) greater than or equal to
• C) less than
• D) equal to

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Definitions:

Step-down Method

An approach in accounting used to allocate indirect costs to relevant cost objects by sequentially distributing service departments' costs to production departments and other service departments.

Labor Hours

A measure of the amount of work output or effort, typically quantified in hours, provided by employees or workers.

Space Occupied

The area utilized by a business for its operations, including manufacturing, storage, and office space.

Step-down Method

A cost allocation method that sequentially assigns service department costs to other departments, including other service departments, based on specified criteria.