If a Manager Is Evaluating a Project That Will Affect

question 4

Multiple Choice

If a manager is evaluating a project that will affect the cash flows of other projects, she should first calculate the NPV of the project as an independent project and

• A)reject it if it has a negative NPV to avoid reducing firm value.
• B)accept it if it has a positive NPV in order to increase firm value.
• C)accept it if it has a zero NPV in order to increase firm value.
• D)Both A and C are correct statements.

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Definitions:

Guarantor

A person or entity that agrees to be responsible for another's debt or obligations if the latter fails to fulfill them.

Gummed Seal

A type of adhesive closure used on envelopes and packages that becomes sticky when moistened.

Heavy Machinery

Large and heavy equipment and machinery used in industries such as construction, mining, and manufacturing for tasks requiring significant power and force.

Excavation

The process of digging up earth, soil, or rock, often used in archeology or construction to uncover structures or artifacts.