The Decision Rule for Net Present Value Is To

question 16

Multiple Choice

The decision rule for net present value is to:

• A)Accept all projects with cash inflows exceeding initial cost
• B)Reject all projects with rates of return exceeding the opportunity cost of capital
• C)Accept all projects with positive net present values
• D)Reject all projects lasting longer than 10 years

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Definitions:

Tax

A mandatory monetary fee or different kind of charge levied on a taxpayer by a government entity to support government expenditures and various public costs.

Tax Revenue

The income that is gained by governments through taxation, which is used to fund public services and government obligations.

Tax

A compulsory financial charge imposed by a government on individuals or entities to fund public expenditures, providing revenue for government functions.

Elasticities

Measures in economics that indicate how changes in one variable, such as price or income, affect a change in another variable, such as demand or supply.