Assuming the Cost of Capital Is 10

question 14

Multiple Choice

Assuming the cost of capital is 10.0%, which of the following results indicates the investment should NOT be made?

• A) The net present value is less than 0.0
• B) The benefit cost ratio is less than 1.0
• C) The internal rate of return is 8%
• D) The payback period is 10 years
• E) All of the above indicate the investment should not be made

---

Definitions:

Accounts Receivable

Represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Supplies

Items used in the operation of a business that are consumed or are not permanent, such as paper, pencils, and cleaning materials.

Net Income

The net income a company achieves following the deduction of all costs, taxes, and expenses from its total earnings.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the owners' share.