If the Calculated NPV Is Negative,then Which of the Following

question 181

Multiple Choice

If the calculated NPV is negative,then which of the following must be true? The discount rate used is

• A) Equal to the internal rate of return.
• B) Too high.
• C) Greater than the internal rate of return.
• D) Too low.
• E) Less than the internal rate of return.

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Definitions:

Specific Performance

A legal remedy requiring a party to fulfill their obligations under a contract, rather than simply paying damages for failing to do so.

Hadley v. Baxendale

A landmark English court decision from 1854 that established the principle for determining damages in breach-of-contract cases, emphasizing foreseeability of damages.

Restitution

A legal principle requiring a party who has unlawfully benefited at the expense of another to compensate the aggrieved party.

Lost Profits

Represent potential earnings that were not realized due to a breach of contract or other wrongful act.