When using a hurdle rate, if the NPV of the cash outflows and cash inflows is negative, it suggests that the buyer should buy the business.

Name: When using a hurdle rate, if the NPV of the cash outflows and cash inflows is negative, it suggests that the buyer should buy the business.
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Question

Quizplus · Accepted Answer

A negative NPV (Net Present Value) indicates that the present value of cash outflows exceeds the present value of cash inflows, suggesting the investment does not meet the hurdle rate and therefore should not be pursued.

When Using a Hurdle Rate, If the NPV of the Cash