When Managers Cannot Determine Whether to Invest Now or Wait

question 104

Multiple Choice

When managers cannot determine whether to invest now or wait until costs decrease later,the rule should be to:

• A) postpone until costs reach their lowest.
• B) invest now to maximize the NPV.
• C) postpone until the opportunity cost reaches its lowest.
• D)invest at the date that gives the highest NPV today.

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Definitions:

Price-fixing

An illegal agreement among competitors to set prices at a certain level, rather than competing naturally in the market.

Tying Contracts

Agreements where the sale of one product (the tying product) is conditioned on the buyer purchasing another product (the tied product).

Antitrust Laws

Legislation aimed at preventing anti-competitive practices, monopolies, and to promote fair competition for the benefit of consumers.

Monetary Award

A financial compensation granted to a party, often as a result of a legal settlement or judgement.