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:

Linked

Connected or related in some way, either physically, logically, or causally.

Conceptual Hierarchy

A system of classification where concepts are arranged in a hierarchical structure based on their complexity or inclusiveness.

Script

A sequence of expected behaviors for a given situation, often described in the context of cognitive psychology to understand how individuals act in social settings.

Mnemonic Device

A tool that aids in the retention and retrieval of information through association with something easy to remember.