A Firm Should Accept Projects with Positive Net Present Values

question 37

Multiple Choice

A firm should accept projects with positive net present values primarily because those projects will

• A)produce cash inflows that exceed the cash outflows.
• B)return the firm's initial cash outlay within 1 year.
• C)create value for the firm's current stockholders.
• D)produce only positive cash flows after the initial investment period.
• E)increase the current liquidity of the firm.

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Definitions:

Disposable Income

The amount of income left for spending or saving after taxes have been deducted.

Psychosocial Factors

Elements that involve psychological and social aspects influencing individual behavior and well-being.

Free Trade Zone

A designated area within a country where goods can be imported, stored, handled, manufactured, or reconfigured without being subject to the country's standard import duty regulation.

Mexico

A country located in the southern portion of North America, known for its rich cultural heritage, diverse ecosystems, and significant historical influence.