Which of the Following Is Not a Rationale for Using

question 103

Multiple Choice

Which of the following is not a rationale for using the NPV method in capital budgeting?

• A) An NPV of zero signifies that the project's cash flows are just sufficient to repay the invested capital and to provide the required rate of return on that capital.
• B) A project whose NPV is positive will increase the value of the firm if that project is accepted.
• C) A project is considered acceptable if it has a positive NPV.
• D) A project is not considered acceptable if it has a negative NPV.
• E) All of the above are true.

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Definitions:

Causal Relationship

A relationship where one event (the cause) directly leads to the occurrence of another event (the effect).

Correlation Coefficient

A statistical measure that indicates the extent to which two variables change together.

Correlational Study

A type of research method that examines the relationship between two or more variables without determining causality.

Variables

elements, features, or factors that are liable to vary or change within a research or experimental design.