Which of the Following Is True, Concerning NPV

question 41

Multiple Choice

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) The project recovers the initial investment and earns a return greater than the RRR.

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Definitions:

Goodwill

The intangible asset that arises as a result of the acquisition of one company by another for a premium value, representing elements like reputation, brand, intellectual property, and commercial secrets.

Routine Inquiry

Routine inquiry represents the regular and standardized requests for specific information, typically utilized in corporate and academic fields for clarity and efficiency.

Goodwill

The positive reputation and relationship a business cultivates with its stakeholders, contributing to customer loyalty and long-term success.

Cost Estimates

Predictions or approximations of the expenses associated with a project, task, or purchase, often used in budgeting and planning.