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

question 75

Multiple Choice

If the net-present-value of an investment is negative,the:

• A)Proposed investment should be rejected
• B)Firm's cost of capital is greater than the discount rate
• C)Investment's return is greater than the firm's cost of capital
• D)Cost of the asset is less than the present value of the future cash flows

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Definitions:

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.

Shelter Principle

A legal doctrine in property law that allows a person who acquires property in good faith and without notice of prior claims to be protected from those claims.

Holder

In financial terms, an individual or entity that possesses a negotiable instrument, such as a check or bond, legally.

Holder In Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus has certain protections against defenses and claims that could be asserted against the original payee.