Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank's other offices to increase.
• B) The NPV method automatically deals correctly with externalities, even if the externalities are not specifically identified, but the IRR method does not.This is another reason to favor the NPV.
• C) Both the NPV and IRR methods deal correctly with externalities, even if the externalities are not specifically identified.However, the payback method does not.
• D) Identifying an externality can never lead to an increase in the calculated NPV.
• E) An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations.If the project would have a favorable effect on other operations, then this is not an externality.

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Definitions:

Distribution Company

A company that is responsible for managing the distribution of films to various outlets, including theaters, streaming platforms, and home video.

United Artists

A film and television production company founded by several leading Hollywood actors and filmmakers in 1919 to control their own interests.

Crosscutting

An editing technique used in filmmaking to establish action occurring at the same time in two different locations by cutting back and forth between them.

Birth Of A Nation

A 1915 American silent film directed by D.W. Griffith; controversial for its portrayal of African Americans and its glorification of the Ku Klux Klan.