Which of the Following Statements Is CORRECT

question 14

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 increase.
• 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:

Group And Family Therapies

Psychological treatments involving multiple participants, typically focusing on interpersonal relationships and dynamics.

Social Systems

Structured communities or organizations within which individuals live, work, and interact according to certain rules and norms.

Understanding

The process or capability of comprehending, grasping the meaning, significance, or nature of something.

Meta-analysis

A research method that combines and analyzes data from multiple studies to derive conclusions about that data set.