If a Project's _____ Exceeds the Firm's Weighted Average Cost

question 7

Multiple Choice

If a project's _____ exceeds the firm's weighted average cost of capital (WACC) , its net present value (NPV) will be positive. 

• A)marginal cost of capital
• B)incremental operating cash flows
• C)inflation premium
• D)internal rate of return (IRR)
• E)initial investment outlay

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Definitions:

Oligopoly

A market structure characterized by a small number of firms controlling a large market share, leading to limited competition and potentially higher prices for consumers.

Monopolistic Competition

A competitive landscape where numerous companies offer products that are alike but not the same, providing an opportunity for limited market control and the distinction of products.

Concentration Ratio

A statistical measure that indicates the extent of competition in a market, calculated as the market share of the largest firms.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs, representing the profit beyond the normal return on investment.