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.

---

Definitions:

Evaluation

The act of evaluating or judging the significance, worth, or quality of an item.

Awareness

The level of consumer knowledge about a product, brand, or issue, which is crucial for marketing and communication strategies.

Interest

The cost of borrowing money, typically defined as a percentage of the principal amount that is charged by lenders to borrowers for the use of the funds.

Promotion-to-Sales Ratio

A metric used to measure the effectiveness of a marketing campaign, calculated by dividing the cost of promotion by the sales generated.