Which of the Following Statements Is CORRECT

question 25

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) 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 decline.
• C) 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.
• D) Both the NPV and IRR methods deal correctly with externalities,even if the externalities are not specifically identified.However,the payback method does not.
• E) Identifying an externality can never lead to an increase in the calculated NPV.

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Definitions:

TIMSS

An acronym for Trends in International Mathematics and Science Study, which assesses the knowledge and skills of students around the world in these subjects.

International Test

An assessment administered across multiple countries to evaluate and compare educational performance or abilities.

Science And Math

Academic disciplines that study the natural world using the scientific method and the use of numbers and symbols to understand patterns, quantities, and structures.