If the Net-Present Value of an Investment Is Negative,which of the Following

question 3

Multiple Choice

If the net-present value of an investment is negative,which of the following is true?

• A)The negative amount represents the cash the company will lose if it makes the
• Investment.
• B)The negative amount represents the amount the price of the investment must decrease
• Before the company would consider buying the operational asset.
• C)The negative amount represents the difference between actual return and expected
• Rate of return.
• D)The negative amount represents the difference in the expected rate of return and the
• Cost of capital.

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Definitions:

Rent on Office

The cost incurred for leasing office space, which is considered an operational expense for businesses.

Selling and Administrative Expense

The aggregate of all indirect costs associated with the selling of products and the general operations of a business.

Direct Materials

Raw materials that can be physically and directly associated with the manufacturing of finished goods.

Depreciation

The method of allocating the cost of a tangible asset over its useful life.