An Analysis of a Proposal by the Net Present Value

question 148

Multiple Choice

An analysis of a proposal by the net present value method indicated that the present value of future cash inflows exceeded the amount to be invested. Which of the following statements best describes the results of this analysis?

• A) The proposal is desirable, and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.
• B) The proposal is desirable, and the rate of return expected from the proposal is less than the minimum rate used for the analysis.
• C) The proposal is undesirable, and the rate of return expected from the proposal is less than the minimum rate used for the analysis.
• D) The proposal is undesirable, and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.

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Definitions:

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