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:

Market Price

The current price at which a good or service can be bought or sold, determined by the intersection of demand and supply forces in the market.

Quantity Demanded

The total amount of goods or services that consumers are willing and able to purchase at a given price in a specific time period.

Quantity Supplied

The quantity of a product or service that suppliers are ready and capable of selling at a particular price during a certain timeframe.

Demand Curve

A visual depiction that illustrates the connection between a product's price and the amount consumers are willing to buy at different prices.