Which of the Following Statements Is Correct

question 169

Multiple Choice

Which of the following statements is correct?

• A) Because discounted payback takes account of the required rate of return,a project's discounted payback is normally shorter than its regular payback.
• B) The NPV and IRR methods use the same basic equation,but in the NPV method the discount rate is specified and the equation is solved for NPV,while in the IRR method the NPV is set equal to zero and the discount rate is found.
• C) If the required rate of return is less than the crossover rate for two mutually exclusive projects' NPV profiles,a NPV/IRR conflict will not occur.
• D) If you are choosing between two projects which have the same life,and if their NPV profiles cross,then the smaller project will probably be the one with the steeper NPV profile.
• E) If the required rate of return is relatively high,this will favor larger,longer-term projects over smaller,shorter-term alternatives because it is good to earn high rates on larger amounts over longer periods.

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Definitions:

Antibiotic-Resistant Diseases

Infections caused by bacteria that have evolved the ability to survive treatment with antibiotics that were previously effective against them.

Antibiotics

Medicinal substances used to treat bacterial infections by either killing the bacteria or inhibiting its growth.

Market

An economic system or environment where buyers and sellers engage in exchanges of goods, services, or information.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net benefits to society from a market transaction.