Golden Rainbow Ltd has invested £4m in a new research project started three years ago. The CFO calculates that the average rate of return on the project is –6%. Is this possible?
A.
yes – projects can have a negative rate of return
B.
yes – but this is likely to change to a positive figure shortly
C.
no – a rate of return is always displayed as a positive number
D.
no – a rate of return is expressed in years rather than as a percentage
A negative rate of return indicates that the project is generating a loss of 6% per annum.
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