If a Firm Has Achieved Its Target Cash Balance the Net

question 34

Multiple Choice

If a firm has achieved its target cash balance the net present value is:

• A) positive because the cash balance is positive.
• B) zero because increasing the cash balance increases the interest cost.
• C) negative because the cash balance has a financing cost.
• D) positive because decreasing the cash decreases the cost of illiquidity.

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Definitions:

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A federal department in the United States established to protect the country from terrorist attacks and respond to natural disasters.

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Facilities that generate electricity through the controlled nuclear reaction of uranium or other nuclear fuels, producing heat to boil water and produce steam for driving turbines.

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The splitting of an atomic nucleus into two or more smaller nuclei, accompanied by the release of energy and usually one or more neutrons.