Which of the Following Is NOT Assumed in a Rational

question 28

Multiple Choice

Which of the following is NOT assumed in a rational decision?

• A)a clear and specific goal
• B)a clear and unambiguous problem
• C)Most alternatives and consequences are known.
• D)Value is maximized.

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Definitions:

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculating the difference between the present value of cash inflows and outflows.

Present Value Index

A calculation that compares the present value of cash inflows to the initial investment, often used in capital budgeting.

Compound Interest

The calculation of interest on the initial principal and also on the accumulated interest of previous periods.

Average Rate of Return

A method of determining the profitability of an investment by dividing the average annual profit by the initial investment cost.