Including the Option to Expand in Project Analysis Will Tend

question 20

Multiple Choice

Including the option to expand in project analysis will tend to

• A)extend the duration of a project but not affect the project's net present value.
• B)increase the cash flows of a project but decrease the project's net present value.
• C)decrease the net present value of a project.
• D)increase the net present value of a project.
• E)have no effect on either a project's cash flows or its net present value.

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Definitions:

Anticipated Policy

Economic or governmental policies expected to be implemented in the future, which can influence current economic behaviors and decisions.

Wages

The compensation paid to employees for their labor, typically quantified as an hourly, daily, or piece-rate basis.

Price Level

A benchmark for assessing the average current prices of a vast variety of goods and services produced within the economy.

Active Policy

A governmental policy that involves direct intervention in the economy, such as adjusting interest rates or spending.