Suppose the Net Present Value Is Negative

question 120

Multiple Choice

Suppose the net present value is negative. What would best describe the return on the investment?

• A) acceptable
• B) equal to the discount rate
• C) less than the discount rate
• D) more than the discount rate

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Definitions:

Marginal Social Cost

The total cost to society of producing one additional unit, including both private costs and any external costs.

Marginal Social Benefit

The extra advantage to the community that comes from creating or using an additional unit of a product or service.

Pollution

It refers to the introduction of harmful substances or products into the environment, causing adverse effects on living beings and ecosystems.

External Costs

Costs that are not reflected in the market price of goods or services, often borne by society.