If the Net Present Value of a Project Is Greater

question 24

Multiple Choice

If the net present value of a project is greater than zero,then the:

• A) project cannot be carried out as the cash outflow is too high.
• B) present value of cash outflows is higher than present value of cash inflow.
• C) project will require 5 years to break even.
• D) project generates wealth.

---

Definitions:

Null Hypothesis

A statement or hypothesis set up to be nullified or refuted in order to support an alternative hypothesis in statistical testing.

Significance Tests

Statistical tests used to determine whether the observed data deviates significantly from the null hypothesis or not.

Significance Test

A statistical test used to determine if there is enough evidence in a sample of data to infer that a condition holds true for the entire population.

Random Sample

A sampling method in which each member of a population has an equal chance of being included, ensuring that the sample represents the entire population.