If a Company Is in the Situation of Having Unlimited

question 19

Multiple Choice

If a company is in the situation of having unlimited capital funds, the best decision rule, considering only financial factors, is for the company to invest in all projects in which:

• A) The payback period is short.
• B) The accounting (book) rate of return (ARR) is greater than its current return on invested capital (ROI).
• C) The net present value (NPV) is greater than the cost of capital.
• D) The internal rate of return (IRR) is greater than zero.
• E) The NPV is greater than zero.

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Definitions:

Ego Resiliency

In Jack Block’s personality theory, the ability to vary one’s level of ego control in order to respond appropriately to opportunities and situational circumstances.

Psychological Adjustment

The process of achieving a healthy, balanced state of psychological well-being through adapting to new conditions or the environment.

Self-monitoring

The tendency of individuals to observe and regulate how they are perceived by others, adjusting their behavior accordingly.

Self-control

The ability to regulate one's emotions, thoughts, and behavior in the face of temptations and impulses.