A Firm's Value Increases When It Invests in Projects That

question 13

Multiple Choice

A firm's value increases when it invests in projects that have:

• A) a rate of return less than the discount rate.
• B) a rate of return equal to the discount rate.
• C) a rate of return greater than the discount rate.
• D) a rate of return equal to or less than the discount rate.

---

Definitions:

Static Reasoning

A type of thinking where an individual assumes the world is unchanging and what is true now will always be true.

Magical Thinking

The belief that one's thoughts, actions, or words can directly influence the external world in an irrational way, often characteristic of childhood developmental stages.

Centration

A cognitive limitation in early childhood, where one focuses on a single, salient aspect of an object or situation, ignoring other relevant features.

Conservation

In cognitive development, the understanding that properties such as mass, volume, and number remain the same despite changes in the forms of objects.