Which of the Following Statements Regarding the NPV Decision Rule

question 12

Multiple Choice

Which of the following statements regarding the NPV decision rule is FALSE?

• A)Reject projects with a NPV of zero,as accepting them is equivalent to reducing firm value.
• B)When faced with a set of alternatives,choose the one with the highest NPV.
• C)Accept those projects with a positive NPV,as accepting them is equivalent to receiving their NPV in cash today.
• D)Reject those projects with a negative NPV.

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Definitions:

Guarantor

An individual or entity that agrees to be responsible for another’s debt or performance under a contract if the original party fails to meet their obligations.

Principal Debtor

The primary individual or entity responsible for repaying a debt or obligation under the terms of a loan agreement or financial contract.

Obligor

An obligor is a person or entity legally obliged to provide a benefit or payment to another in a contractual agreement.

Collateral Contracts

Collateral contracts are supplementary agreements made in addition to a primary contract, which impose additional obligations or conditions related to the primary contract's terms.