A Firm Is Evaluating a Project That Has a Net

question 73

Multiple Choice

A firm is evaluating a project that has a net present value of $0 when a discount rate of 10% is used.What will be the result of a discount rate of 8%?

• A)a negative net present value
• B)a positive net present value
• C)a net present value of $0
• D)a positive present value

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Definitions:

Bond

A financial instrument representing a loan made by an investor to a borrower, typically used by companies, municipalities, states, and sovereign governments to finance projects and operations.

Rational Investor

An individual who makes investment decisions based on logical analysis, aiming to maximize returns and minimize risks.

Interest Rate

The rate at which a borrower pays interest to a lender for borrowing money.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.