If the Net Present Value of a Proposed Investment Is

question 61

Multiple Choice

If the net present value of a proposed investment is positive:

• A)the cost of the investment is more than the present value of the future cash flows.
• B)the investment does not earn the required rate of return.
• C)the present value of the future cash flows would be unaffected by the proposed investment.
• D)the business should make the investment because the present value of the future cash flows is more than the cost of the investment.

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Definitions:

Yield

The income return on an investment, such as the interest or dividends received, usually expressed as an annual percentage rate based on the investment's cost, its current market value, or its face value.

Canada Savings Bond

A secure investment instrument offered by the Canadian government, allowing citizens to lend money to the government with a guaranteed return.

Redeemed

Refers to the act of exchanging a financial instrument, such as a bond or coupon, for cash or goods.

Interest Rates

The percentage of a loan or deposit amount charged as interest to the borrower or paid to the investor.