Which One of the Following Statements Concerning Net Present Value

question 133

Multiple Choice

Which one of the following statements concerning net present value (NPV) is correct?

• A) An investment should be accepted if, and only if, the NPV is exactly equal to zero.
• B) An investment should be accepted only if the NPV is equal to the initial cash flow.
• C) An investment should be accepted if the NPV is positive and rejected if it is negative.
• D) An investment with greater cash inflows than cash outflows, regardless of when the cash flows occur, will always have a positive NPV and therefore should always be accepted.
• E) Any project that has positive cash flows for every time period after the initial investment should be accepted.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.