Positive NPV Projects Most Often Occur Because

question 43

Multiple Choice

Positive NPV projects most often occur because:

• A)analysts select sufficiently low discount rates.
• B)most projects are unique and innovative.
• C)cash-flow projections are extended into the future.
• D)of competitive advantages held by firms.

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Definitions:

Investment

is the allocation of resources, usually money, with the expectation of generating an income or profit.

Principle

The original sum of money borrowed in a loan, or the amount of the investment before interest.

Interest

The cost of borrowing money or the return on investment, calculated as a percentage of the principal sum.

Loan

A sum of money borrowed that is expected to be paid back with interest.