Which of the Following Should Be Assumed About a Project

question 32

Multiple Choice

Which of the following should be assumed about a project that requires a $100,000 investment at time-period zero, then returns $20,000 annually for five years?

• A)the NPV is negative
• B)the NPV is zero
• C)the profitability index is 1.0
• D)the IRR is negative

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Definitions:

MRPS

Marginal Revenue Product of Labor, a measure of the additional revenue generated by hiring an additional worker, holding other factors constant.

Profit-maximizing Rule

A principle guiding businesses to set their output and prices at levels where marginal cost equals marginal revenue to maximize profit.

Cost-minimization Rule

A principle suggesting that firms seek to produce any given level of output at the lowest possible cost.

Wage Increase

An upward adjustment in wages or salaries, often to match inflation, improve living standards, or reward performance.