Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank's other offices to increase.
• B) The NPV method automatically deals correctly with externalities, even if the externalities are not specifically identified, but the IRR method does not.This is another reason to favor the NPV.
• C) Both the NPV and IRR methods deal correctly with externalities, even if the externalities are not specifically identified.However, the payback method does not.
• D) Identifying an externality can never lead to an increase in the calculated NPV.
• E) An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations.If the project would have a favorable effect on other operations, then this is not an externality.

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Definitions:

Segment Formation

The process of dividing a broad market into distinct subsets of consumers with common needs or characteristics, for targeted marketing.

Microwave Oven

A kitchen appliance that cooks or heats food by exposing it to microwave radiation, providing a quick and convenient way to prepare meals.

Geographic Segmentation

The process of dividing a market into segments based on geographic regions, such as nations, states, or cities, to target marketing efforts effectively.

Downsized Microwave

A smaller-than-standard microwave oven designed to fit in limited spaces or for reduced cooking requirements.