To Avoid Rejecting Projects That Actually Should Be Accepted

question 135

Multiple Choice

To avoid rejecting projects that actually should be accepted,
1. intangible benefits should be ignored.
2. conservative estimates of the intangible benefits' value should be incorporated into the NPV calculation.
3. calculate net present value ignoring intangible benefits and then, if the NPV is negative, estimate whether the intangible benefits are worth at least the amount of the negative NPV.

• A) 1
• B) 2
• C) 3
• D) both 2 and 3 are correct.

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Definitions:

Assessed Tax Valuation

The valuation placed on property by a public tax assessor for the purposes of taxation.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.

Distribution Center

A warehouse or specialized facility where goods are stored, managed, and then distributed to retailers or directly to customers.

Technologically Feasible

A state in which a new technology has been developed to the point where it is operational and can be reliably produced or implemented.