Project a Has a Negative NPV

question 43

Multiple Choice

Project A has a negative NPV.If accepted,what would be its impact on the shareholder wealth?

• A)To increase it
• B)To maintain it at the existing level
• C)To decrease it
• D)Unclear as there is insufficient information to decide if the project will be beneficial to the shareholders

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Definitions:

Risk-Utility Analysis

A process used to evaluate the safety of a product by weighing the risks associated with its use against its utility or benefits.

Fire-Retardant Materials

Materials that are designed or treated to resist fire and reduce its spread, commonly used in construction and manufacturing to enhance safety.

Strict Liability

Legal responsibility for damages, or for performing a specific act, that is imposed without the need to prove fault or negligence.

Defective Condition

A state in which a product possesses an inherent flaw or deficiency that makes it dangerous or unfit for its intended use.