A Firm Would Accept a Project with a Net Present

question 61

Multiple Choice

A firm would accept a project with a net present value of zero because

• A) the return on the project would be zero.
• B) the project would maintain the wealth of the firm's owners.
• C) the project would enhance the wealth of the firm's owners.
• D) the return on the project would be positive.

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Definitions:

Adoption

In corporation law, a corporation’s acceptance of a preincorporation contract by action of its board of directors, by which the corporation becomes liable on the contract.

Novation

The act of replacing one obligation with a new one, extinguishing the original obligation.

Ratification

Ratification is the formal approval or confirmation of an action or agreement, often used in the context of treaties, contracts, or laws.

Promoters

Individuals or companies responsible for establishing a corporation or business venture, including raising capital and completing legal formalities.