Use the Information Below to Answer the Following Question(s)

question 57

Multiple Choice

Use the information below to answer the following question(s) .Wet Water Company drills residential and commercial wells.The company is in the process of analyzing the purchase of a new drill.Information on the proposal is provided below:
Note: Other than the initial investment, cash flows are end of period.The working capital is returned at the end of the investment period.
-Which of the following is TRUE, concerning NPV?

• A)When the NPV is positive, the sum of the cash flows from the project equal the initial investment.
• B)When the NPV is negative, the sum of the cash flows from the project must also be negative.
• C)The project just recovers the initial investment, discounted by the hurdle rate.
• D)The IRR is less than the RRR when the NPV is positive, after using the RRR as the discount rate.
• E)When the NPV is positive, the project recovers the initial investment and earns a return greater than the RRR.

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Definitions:

Long-Term Objectives

Goals or targets that an organization aims to achieve over an extended period, typically over several years.

Company's Benefits

The range of perks and supports offered by an employer to its employees, which may include health insurance, retirement plans, and paid time off.

Retirement Plans

Financial strategies or programs that allow individuals to save for their retirement, often with contributions from employers.

Union Demands

Requests or requirements issued by a labor union on behalf of its members, often relating to wages, working conditions, and benefits during negotiations.