If a Firm Considering the Purchase of an Asset Determines

question 36

Multiple Choice

If a firm considering the purchase of an asset determines that the asset's NPV > 0, ________ the asset will ________ profits.

• A) refusing to buy; increase
• B) purchase of; increase
• C) purchase of; decrease
• D) sale of; increase

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Definitions:

Reasonable Value

The fair or market value of a service or item, considered to be value as determined by what a willing buyer would pay to a willing seller in an arms-length transaction.

Workmanlike Manner

The expectation that services or work performed will meet the standards set by skilled individuals in that trade or industry.

Satisfaction

in legal terms means the fulfillment or discharge of an obligation, such as the repayment of a debt, resulting in the termination of the obligation.

Condition Precedent

A condition in a contract that must be met before a party's obligation becomes enforceable.