Which of the Following Best Describes the Net Present Value

question 23

Multiple Choice

Which of the following best describes the Net Present Value rule?

• A) When choosing among any list of investment opportunities where resources are limited, always choose those projects with the highest net present value (NPV).
• B) Take any investment opportunity where the net present value (NPV) is not negative; turn down any opportunity when it is negative.
• C) Take any investment opportunity where the net present value (NPV) exceeds the opportunity cost of capital; turn down any opportunity where the cost of capital exceeds the net present value (NPV)
• D) If the difference between the present cost of an investment and the present value (PV) of its benefits after a fixed number of years is positive, the investment should be taken; otherwise it should be rejected.

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Definitions:

Analytic

Involving the use of logical reasoning, detailed examination, and systematic analysis to understand or solve problems.

Synthetic

Artificially made, usually through chemical synthesis, as opposed to being naturally produced.

Customer-Driven

Customer-driven refers to business strategies and operations that prioritize the needs and preferences of customers in the development and delivery of products or services.

Process-Oriented

describes an approach focusing on the execution of tasks and procedures to achieve specific outcomes, emphasizing the importance of how actions are performed.