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

question 59

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 IRR
• B) Too high
• C) Greater than the IRR
• D) Too low
• E) Less than the IRR

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Definitions:

Opposite Signs

A term referring to two numbers or variables that have different mathematical signs, one being positive and the other negative.

Equal

Having the same value, quantity, or measure as something else.

Regression Line

A straight line that best fits the data points in a scatter plot, showing the relationship between two variables.

Horizontal

A direction or plane that runs left to right and parallel to the ground or bottom margin of a page.