Henry Calculated That the Net Present Value of His Investment

question 21

Multiple Choice

Henry calculated that the net present value of his investment would be zero with a 15 percent internal rate of return.This means that:

• A) the project has no value.
• B) Henry can compare the 15 percent internal rate of return to the required rate of return to determine if the investment should be made.
• C) the project requires an additional 15 percent investment by the company.
• D) the project will break even in 15 years.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in a marketplace.

Minor

Legally refers to an individual who is below the age of majority, and thus, has limited legal rights and responsibilities.

Avoid The Contract

The act of declaring a contract null and void, meaning it is treated as if it never existed due to breaches or violations of terms.

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable.