On a Purely Theoretical Basis, the NPV Is the Better

question 99

Multiple Choice

On a purely theoretical basis, the NPV is the better approach to capital budgeting due to all thefollowing reasons EXCEPT

• A) that it measures the benefits relative to the amount invested.
• B) that it maximizes shareholder wealth.
• C) that there may be multiple solutions for an IRR computation.
• D) for the reasonableness of the reinvestment rate assumption.

---

Definitions:

Quota

A limit set by a government on the quantity of a particular product that can be imported or exported within a given timeframe, used for trade regulation.

Policy Action

A deliberate action taken by a government or other organization to influence economic, social, or environmental outcomes.

Domestic Supply

The sum of all products and services made within a nation, ready for use domestically or for sending abroad.

Domestic Demand

The total demand for goods and services within a country, including demand from both consumers and businesses.