If in Evaluating a Proposal by Use of the Net

question 184

True/False

If in evaluating a proposal by use of the net present value method there is an excess of the present value of future cash inflows over the amount to be invested, the rate of return on the proposal is less than the rate used in the analysis.

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Definitions:

GIC

A finance option available in Canada, the Guaranteed Investment Certificate provides investors with a secured rate of return over an established time period.

Equivalent Value

The monetary value considered to be equal in worth to a specified amount under different conditions or in a different context.

Rate of Return

An investment's performance, marked by gains or losses during a defined period, articulated as a percentage of its beginning cost.

Compounded Semi-annually

This refers to the process of calculating interest on a principal amount at two intervals in a year, effectively increasing the amount of interest earned or paid.