When evaluating a proposal by use of the net present value method, if the present value is less than the amount to be invested, the rate of return on the proposal is more than the rate used in the analysis.

Question

Quizplus · Accepted Answer

If the present value is less than the amount to be invested, it means the proposal does not generate enough cash flows to cover the initial investment and the rate of return is less than the rate used in the analysis.

When Evaluating a Proposal by Use of the Net Present