Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A)A project's discounted payback period (DBP) is normally shorter than its traditional payback period (PB) because DPB accounts for the time value of money, whereas PB does not.
• B)To compute the NPV for a project, the firm's required rate of return must be known. To compute a project's internal rate of return (IRR), the firm's required rate of return is not used because the IRR is the discount rate where the project's NPV equals zero.
• C)Two firms could compute different internal rate of return (IRR) for a project if their required rates of return differ.
• D)If a project's net present value (NPV) is equal to its internal rate of return (IRR), the project's value is in equilibrium.
• E)Everything else equal, firms with higher required rates of return generally are able to purchase more capital budgeting projects than firms will lower required rates of return.

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Definitions:

Correct Rejection

In signal detection theory, the correct identification that a target stimulus is not present.

Subliminal Perception

The processing of information by sensory systems without a person's conscious awareness.

Signal-detection Theory

A theory in psychology and cognitive science that explains how decision makers discern between important stimuli and background noise under conditions of uncertainty.

Psychophysics

The branch of psychology that studies the relationships between physical stimuli and the sensations and perceptions they produce.