Which of the Following Is a True Statement

question 84

Multiple Choice

Which of the following is a true statement?

• A) Any property right system will yield a situation in which all externalities are internalized.
• B) Voluntary agreements can always yield a situation in which all externalities are internalized.
• C) Opportunity costs always exist with whoever has property rights.
• D) Opportunity costs turn external costs into social costs.

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Definitions:

Capital Budgeting

The process of evaluating and selecting long-term investments compatible with the firm's goal of wealth maximization.

NPV

Short for Net Present Value, which is a financial metric used to evaluate the profitability of an investment or project, considering the time value of money.

IRR

Internal Rate of Return - a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Salvage Value

The estimated residual value of an asset at the end of its useful life, often considered in depreciation calculations and asset disposal decisions.