A Rational Manager May Be Reluctant to Commit to a Positive

question 33

Multiple Choice

A rational manager may be reluctant to commit to a positive Net Present Value project when:

• A) The value of the option to abandon is high.
• B) The exercise price is high.
• C) The opportunity cost of capital is high.
• D) The value of the option to wait is high.

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Definitions:

Professional Team

A group of individuals with specialized skills and expertise working together in a coordinated manner towards common professional goals.

Opportunity Cost

The cost of missing out on potential benefits from other alternatives when making a choice.

Forgone Current Income

The income an individual or entity could have earned but chose to forego for pursuing an alternative.

State Universities

Public institutions of higher education that are primarily funded by a state or local government.