A Firm Is Considering the Purchase of an Asset Whose

question 11

Multiple Choice

A firm is considering the purchase of an asset whose stand-alone risk is greater than the average risk of its existing portfolio of assets. In evaluating this asset, the decision maker should:

• A)increase the internal rate of return (IRR) used to evaluate the asset to reflect its higher risk.
• B)increase the asset's net present value (NPV) to reflect its higher risk.
• C)reject the asset because its acceptance would clearly decrease the value of the firm.
• D)ignore the asset's higher risk if, after purchase, it will make up only a small fraction of the firm's total assets.
• E)increase the required rate of return that is used to evaluate the asset to reflect its higher risk.

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Definitions:

SPIN Selling

A sales technique that involves asking Situation, Problem, Implication, and Need-payoff questions to better understand customer needs and offer suitable solutions.

Types of Questions

Varieties of inquiries used for different purposes, such as closed-ended, open-ended, leading, and rhetorical questions.

Personal Selling Process

Personal Selling Process is a face-to-face sales technique involving a series of steps from identifying potential buyers to closing the sale, tailored to fit the individual customer's needs and preferences.

Steps

Sequential actions taken towards achieving a particular goal or completing a process.