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:

Market Supply

The total amount of a specific good or service that is available to consumers in a market at all possible prices.

Industry

A group of companies or businesses that produce the same products or services and are involved in the same type of economic activity.

Perfect Competitor's Demand Curve

A horizontal line reflecting a perfectly elastic demand situation where the firm can sell any quantity at the prevailing market price.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely or extremely to changes in price.