If a Decision Tree Indicates an Expected NPV of $1

question 81

Multiple Choice

If a decision tree indicates an expected NPV of $1 million, then:

• A) at least one of the outcomes had a negative NPV.
• B) all of the outcomes had a positive NPV.
• C) $1 million is the firm's minimum guaranteed profit.
• D)the project still contains uncertainty.

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Definitions:

Industry

A group of companies and organizations involved in the production, processing, and distribution of goods and services in a particular sector of the economy.

Marginal Costs

The amplification of total charges incurred from producing an incremental unit of a product or service.

Upward

Referring to a direction or trend that indicates an increase, improvement, or rise in position or value.

Industry Demand Curve

Represents the total demand for a product or service across all consumers in a given market, showing how quantity demanded varies with price.