Which of the Following Statements Regarding Net Present Value (NPV)is

question 74

Multiple Choice

Which of the following statements regarding Net Present Value (NPV) is INCORRECT?

• A)The NPV represents the value of the project in terms of cash today.
• B)Good projects will have a positive NPV.
• C)The NPV of a project is the difference between the present value of its benefits and the present value of its costs.
• D)When faced with a set of alternatives,choose the one with the lowest NPV in order to minimize the present value of costs.

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Definitions:

Entrepreneur's Forgone Interest

The potential income an entrepreneur sacrifices by investing resources in their own business rather than applying them elsewhere.

Marginal Product

The additional output resulting from the use of one more unit of a factor of production, holding other factors constant.

Marginal Cost

Refers to the increase in total cost that arises from producing one additional unit of a good or service.