QUESTION 24

1. Jim Tyler is evaluating a potential capital investment. He has calculated the net present value using a minimum rate of return of 10%. Using this rate, the net present value is negative. What does this tell him about the rate of return expected for the project?
2. a.If the net present value is negative; the expected rate of return for the project is greater than the 10% minimum or required rate of return.
3. b.If the net present value is negative; the expected rate of return for the project is equal to the 10% minimum or required rate of return.
4. c.Cannot determine from the information given.
5. d.If the net present value is negative; the expected rate of return for the project is less than the 10% minimum or required rate of return.