If the Net Present Value for a Project Is Positive

question 49

Multiple Choice

If the net present value for a project is positive, which of the following is true?

• A) the project should be accepted because its expected rate of return is greater than the cost of capital
• B) its internal rate of return is more than its cost of capital
• C) its expected rate of return is below the required rate of return
• D) its internal rate of return is less than its cost of capital

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Definitions:

Fixed Overhead

Expenses that remain constant for a certain level of production or period of time, such as rent, salaries, and insurance, not directly tied to the level of production.

Work In Process

Inventory that includes goods partially through the production process but not yet complete.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as rent, utilities, and salaries of managers.

Cost Of Goods Sold

The expenses directly related to the manufacturing of products a company sells, encompassing both materials and labor costs.