To Avoid Rejecting Projects That Actually Should Be Accepted

question 135

Multiple Choice

To avoid rejecting projects that actually should be accepted,
1. intangible benefits should be ignored.
2. conservative estimates of the intangible benefits' value should be incorporated into the NPV calculation.
3. calculate net present value ignoring intangible benefits and then, if the NPV is negative, estimate whether the intangible benefits are worth at least the amount of the negative NPV.

• A) 1
• B) 2
• C) 3
• D) both 2 and 3 are correct.

---

Definitions:

IFRS

International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that aim to bring consistency to accounting language, practices, and statements globally.

Reserves

Funds or assets set aside to cover future expenses, losses, or liabilities.

Asset Revaluations

The process of adjusting the book value of a company's assets to reflect their current market values.

Stated Value

A value assigned to no-par value stock by the company's board of directors, used as a basis for accounting and financial reporting.