A negative net present value means that the
A) project's rate of return exceeds the required rate of return.
B) project's rate of return is less than the required rate of return.
C) project's rate of return equals the required rate of return.
D) project is acceptable.

Question

Quizplus · Accepted Answer

A negative net present value indicates that the project's cash outflows (i.e. costs) exceed its cash inflows (i.e. benefits) discounted to present value using the required rate of return. This means the project is not generating enough returns to compensate for the required rate of return, making it not viable. Therefore, the project's rate of return is less than the required rate of return.

A Negative Net Present Value Means That the