You Are Given a Job to Make a Decision on Project

question 3

Multiple Choice

You are given a job to make a decision on project X, which is composed of three independent projects A, B, and C which have NPVs of + $70, -$40 and + $100, respectively. How would you go about making the decision about whether to accept or reject the project?

• A) Accept the firm's joint project as it has a positive NPV
• B) Reject the joint project
• C) Break up the project into its components: accept A and C and reject B
• D) None of the above

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Definitions:

Delegation

The process of assigning responsibility and authority to someone else in order to complete a clearly defined task while retaining accountability for the outcome.

Accountability

The requirement to show performance results to a supervisor.

Obligation

A duty or commitment that an individual or organization is bound to fulfill, often due to legal, moral, or social reasons.

Centralized

A system or organization structure where decision-making authority is concentrated at a single point, usually at the top hierarchical level.