A General Rule in Capital Budgeting Is That a Project

question 101

Multiple Choice

A general rule in capital budgeting is that a project is accepted only if the internal rate of return equals or ________.

• A) exceeds the required rate of return
• B) exceeds the inflation rate
• C) exceeds the risk-free rate
• D) exceeds the accrual accounting rate of return

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Definitions:

Recession

A phase of short-term economic downturn marked by decreased business and manufacturing operations, typically recognized by a decline in Gross Domestic Product for two consecutive quarters.

Efficiency-Wage Theory

The concept that employers may pay a higher wage than the market equilibrium to increase worker productivity, loyalty, and satisfaction, thereby reducing turnover and shirking.

Labor Unions

Organizations that represent workers in negotiations with employers over wages, working conditions, and benefits to protect their rights and interests.

Efficiency Wage

A theory stating employers pay a wage that is higher than the market equilibrium to increase worker productivity and efficiency.