What Would Be an Important Consequence If the CEO of a Company

question 42

Multiple Choice

What would be an important consequence if the CEO of a company required the Finance Department to use a cost of capital rate 2% lower than the true value?

• A) The company would accept investment projects that would reduce shareholder wealth.
• B) The company would reject investment projects that would increase shareholder wealth.
• C) The company would accept investment projects that have a positive net present value.
• D) The company would reject investment projects that have a negative net present value.
• E) The company would accept investment projects with a higher internal rate of return.

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Definitions:

Molecular Orbital

A mathematical function describing the wave-like behavior of an electron in a molecule, which determines its chemical bonding and properties.

Atomic Orbitals

Mathematical equations that detail the position and wave-like motions of electrons within an atom.

Hybrid Atomic Orbitals

Orbitals that result from the combination of standard atomic orbitals within an atom, explaining the bonding in molecules beyond simple shapes.

C-C

A abbreviation typically used to signify a carbon-carbon bond within organic molecules.