Which of the Following Statements Is Most Likely to Be

question 34

Multiple Choice

Which of the following statements is most likely to be correct for a project in which the NPV is negative when based on flows from net income?

• A) NPV may turn positive after adjusting for depreciation expense.
• B) NPV should be calculated with pretax cash flows.
• C) NPV has probably been overestimated.
• D) The project should be rejected or abandoned.

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Definitions:

Hypotheses

Tentative explanations or suppositions made based on limited evidence as a starting point for further investigation.

Arguments

A series of statements typically used to persuade someone of something or to present reasons for accepting a conclusion.

Explanandum

The phenomenon or event that an explanation seeks to explain.

Explanation

A statement or account that makes something clear by describing the relevant structure, mechanisms, or reasons.