Options Models Are Used to Assist in Project Selection Decisions

question 10

Multiple Choice

Options models are used to assist in project selection decisions:

• A)when IRR calculations are favorable but NPV calculations are unfavorable.
• B)when a company may not recover the money it invests in a project.
• C)when NPV calculations are favorable but IRR calculations are unfavorable.
• D)when a company is guaranteed to recover the money it invests in a project.

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Definitions:

Production Possibilities Curve

A curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors.

Slope Southeast

Directionally indicates a downward and to the right trajectory on a graph, often used in economics to describe certain types of curves like the demand curve.

Production Possibilities

A concept in economics that describes the maximum output combinations of goods or services an economy can achieve when all resources are fully and efficiently utilized.

Capital Goods

Long-lasting goods that are used in the production of other goods or services, such as machinery, buildings, and equipment.