To Find the __________ We Begin by Setting the NPV

question 108

Multiple Choice

To find the __________ we begin by setting the NPV of a project equal to zero.

• A) Payback period.
• B) Discounted payback period.
• C) Internal rate of return.
• D) Profitability index.
• E) Average accounting return.

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Definitions:

Positive Externality

A benefit enjoyed by a third-party as a result of an economic transaction they are not directly involved in.

Equilibrium Quantity

The amount of products or services available that matches the amount sought after at the price where supply meets demand.

Socially Optimal

A condition in which resources are allocated in the most efficient way from the perspective of society as a whole.

Positive Externality

A beneficial effect experienced by a third-party or the society at large, as a result of an economic activity, that isn't reflected in the cost.