You Are Given: F₀ = Initial Investment,F₁,F₂,…,F_n Are the Future

question 29

Multiple Choice

You are given: F₀ = initial investment,F₁,F₂,…,F_n are the future net cash flows (where each is > 0) .You are told that the sum of the future cash flows exceeds the initial investment.That is,
(F₁ + F₂ + … + F_n) > F₀.Which of the following statements is (are) true?
(I) IRR must be greater than 0.
(II) NPV must be greater than 0.

• A)I only
• B)II only
• C)I & II are true
• D)Neither are true

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Definitions:

Accounts Payable

Liabilities owed by a company to its suppliers or creditors for goods and services received that have not yet been paid for.

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Permanent Account

An account in the general ledger that carries its ending balance over to the next accounting period, such as assets, liabilities, and equity accounts.

Balance Sheet Accounts

Accounts that appear on the balance sheet, representing the company's assets, liabilities, and shareholders' equity at a specific point in time.