Which of the Following Statements Is Correct

question 67

Multiple Choice

Which of the following statements is correct?

• A) If a project can create employment in a slump area, firm should include such an externality in the NPV calculations.
• B) If cannibalization exists, then the cash flows associated with the project must be increased to offset these effects. Otherwise, the calculated NPV will be biased downward.
• C) If cannibalization is determined to exist, then this means that the calculated NPV considering cannibalization will be higher than the NPV that does not recognize these effects.
• D) Cannibalization is a type of externality that is not against the law, and any harm it causes is done to the firm itself.

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Definitions:

GDP

Gross Domestic Product, the total value of all goods and services produced within a country in a specific time period.

Specific Year

A specific year refers to a particular 12-month period used for referencing or analysis in historical, economic, or other contexts.

Papal Tiara

A crown that was worn by popes of the Catholic Church as a symbol of their authority, until the latter half of the 20th century.

Barberini

An influential Italian noble family, known for their patronage of the arts and involvement in ecclesiastical and political affairs during the 17th century.