If the NPV Form a Project Is Positive It Must

question 19

Multiple Choice

If the NPV form a project is positive it must be that

• A)the discounted payback period is longer than the useful life of the project.
• B)the internal rate of return is lower than the discount used.
• C)the project is not acceptable on a risk adjusted basis.
• D)this project is preferred to any other mutually exclusive project.
• E)accepting the project increases the value of the firm.

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Definitions:

Finance Companies

Businesses that offer short-term loans at substantially higher rates of interest than banks.

Stocks and Bonds

Financial instruments; stocks represent ownership shares in a company, while bonds are loan agreements between the bond issuer and an investor.

Comparable Units

Units or measures that are similar enough in key aspects to be used in comparisons or evaluations.