The Decision Rule for Net Present Value Is To

question 50

Multiple Choice

The decision rule for net present value is to:

• A) accept all projects with cash inflows exceeding initial cost.
• B) reject all projects with rates of return exceeding the opportunity cost of capital.
• C) accept all projects with positive net present values.
• D)reject all projects lasting longer than 10 years.

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Definitions:

Capital Spending

Expenditure by businesses on physical assets like buildings, machinery, and equipment to enhance their capacity or efficiency.

Privatization

The process of turning government enterprises into private enterprises.

U.S. Economy

The economic system of the United States, characterized by a mixed economy with private freedom combined with centralized economic planning and government regulation.

Marginal Propensity

The proportion of an additional amount of income that is used for consumer spending. It's a key concept in understanding how income changes affect spending.