Which of the Following Situations Suggests the Acceptance of an Investment

question 80

Multiple Choice

Which of the following situations suggests the acceptance of an investment proposal?

• A)The present value of the net cash inflows exceeds the initial investment.
• B)The IRR is lower than the hurdle rate.
• C)The cash inflows are lesser than the initial investment.
• D)The investment will have a residual value.

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Definitions:

Freight-out Costs

Expenses associated with the delivery of merchandise from a seller to a buyer; also known as shipping costs or delivery expenses.

Inventory

Inventory represents the goods and materials a business holds for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time.

LIFO Reserve

A contra-asset for the excess of FIFO over LIFO inventory.