Question: When using the NPV method for a particular investment decision, if the present value of all cash inflows is greater than the present value of

When using the NPV method for a particular investment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then ________.
A. the discount rate used was too high
B. the investment provides an actual rate of return greater than the discount rate
C. the investment provides an actual rate of return equal to the discount rate
D. the discount rate is too low

Step by Step Solution

★★★★★

3.39 Rating (149 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The answer is very correct Correct answerB the investment provides an actual rate of re... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

If the present value of $100 due eight years from now is $50, what is the present value of $100 due 16 years from now? Answer without using formula

If the present value of the expected net cash flows from a machine, discounted at 10%, exceeds the amount to be invested, what can you say about the investments expected rate of return? What can you...

If the present value of $280 paid one year from now is $250, what is the one-year discount factor?

When using the fair value method, we adjust the reported amount of the investment for changes in fair value after its acquisition. If the security is classified as trading, how do we report...

On December 31, 2012, Georgetown Distributors borrowed $2,180,000 by issuing four-year, zero coupon bonds. The face value of the bonds is $3,000,000. Georgetown uses the straight- line method to...

What is the present value interest factor? What is the formula for determining the present value of a single dollar amount when using the present value interest factor table?

What is the future value interest factor for an annuity? What is the formula for determining the future value of an annuity when using the future value interest factor for an annuity table?

What is the present value interest factor for an annuity? What is the formula for determining the present value of an annuity when using the present value interest factor for an annuity table?

Explain why premiums and discounts on bond investments must be amortized when using the amortized cost model and why no amortization occurs when using the fair value through profit or loss model?

The management of Mid South Utilities Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: The generating unit requires an investment of...

Imagine you are the head of human resources for a hospital system and you have been asked to develop acampaignto recruit a more diverse employee base. Discuss some of the approaches you may use to...

Write a Stored Procedure SP_Report_NEW_Budget using the view you created in Part 1-3). Use CURSOR to write the stored Procedure for the tasks below. does the following tasks: Your Stored Procedure...

A capital investment project you have been asked to analyze has net incremental cash flows, Years 1 through 4 , as listed below. The initial investment required is $ 1 million, and the WACC is 1 1 ....

TRUE OR FALSE? Management should consider the diversity (education, nationality etc.) of its workforce, when planning EMS communication activities

Consider the following relational schema, representing five relations describing shopping transactions and information about credit cards generating them [the used notation is explained above]....

Apply the AOTA Code of Ethics to Case 9--My Neighbor's Keeper in the required text. Answer the following prompt: The AOTA Code of Ethics is broken down into three sections -- Core Values,...

Pls help me Pedal Power Products Company seis Bicycles for 3 0 with a 30-day Warranty against defects. Past experience indicates that of the bicycles will have a delect and that the necessary repairs...

Question 2 For an n x n matrix A = form) via (aij)

Assume that Motorola, Inc., issues bonds with a face value of $10,000,000 for $9,200,000. The bonds have detachable warrants that may be traded in for shares of common stock. Assume that immediately...

The Coca-Cola Company (Coca-Cola), like PepsiCo, manufactures and markets a variety of beverages. Exhibit 3.18 presents a statement of cash flows for Coca-Cola for three years. Exhibit 3.18 The...

On June 24, Year 4, a major airline entered into a revolving accounts receivable facility (Facility) providing for the sale of $489 million of a defined pool of accounts receivable (Receivables)...

Acadian Bakers is a small sweets bakery in Houston, Texas. One of its products is a croissant. Acadian bakes the croissants from frozen croissants that it buys. For the sake of quality, the company...

Consider the usage of item # 14-46-506: 4 ft. Supersaver fluorescent lamps in Sterling Pulp Chemicals (now part of ERGO Worldwide) in the first 10 months of 2008. Month 2008 Jan10 Feb10 Mar66 Apr32...

A manager has just received an evaluation from an analyst on two potential forecasting methods. The analyst is indifferent between the two methods, saying that they should be equally accurate and in...