Which of the Following Statements Is CORRECT

question 25

Multiple Choice

Which of the following statements is CORRECT?

• A) An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations.If the project would have a favorable effect on other operations,then this is not an externality.
• B) An example of an externality is a situation where a bank opens a new office,and that new office causes deposits in the bank's other offices to decline.
• C) The NPV method automatically deals correctly with externalities,even if the externalities are not specifically identified,but the IRR method does not.This is another reason to favor the NPV.
• D) Both the NPV and IRR methods deal correctly with externalities,even if the externalities are not specifically identified.However,the payback method does not.
• E) Identifying an externality can never lead to an increase in the calculated NPV.

---

Definitions:

Syntax Error

An error in the code due to violation of the programming language's rules or grammar.

Control Statements

Instructions in programming that control the flow of execution, such as loops, if-else conditions, and switch cases.

Flag-controlled

A loop or program segment that uses a boolean variable (flag) to control its execution flow.

While Loop

A programming construct that executes a block of code repeatedly as long as a specified condition evaluates to true.