Identify Which One of the Following Statements Is True

question 31

Multiple Choice

Identify which one of the following statements is true.

• A)Comparisons between alternatives are best made without considering tax effects.
• B)Predictions of cash flows and discount rates should be computed without regard to inflation.
• C)When two projects are mutually exclusive, the project that has the smallest net present value should be undertaken.
• D)If alternate projects have unequal lives, comparisons may be made over the useful life of either the longer-lived project or the shorter-lived one.

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Definitions:

Available-For-Sale

A classification for financial assets indicating they are not primarily held for trading purposes or expected to be sold in the short-term, allowing for changes in value to be recorded in other comprehensive income.

Amortized Cost

The initial investment amount of a financial asset or liability adjusted for principal repayments and, if applicable, the cumulative effect of using the effective interest method.

Debt Securities

Financial instruments representing a loan made by the investor to the issuer which may include bonds, notes, and bills.

Market Value

The current price at which an asset or service can be bought or sold in a public market, often determined by supply and demand dynamics.