Which of the Following Is Always True Regarding the NPV

question 124

Multiple Choice

Which of the following is always true regarding the NPV decision model?

• A) If a project is found to be acceptable under the NPV approach, it would also be acceptable under the internal rate of return (IRR) approach.
• B) The NPV and the IRR approaches will always rank two projects in the same order of preference.
• C) If a project is found to be acceptable under the NPV approach, it would also be acceptable under the payback approach.
• D) If a project is found to be acceptable under the NPV approach, it would also be acceptable under the book (accounting) rate of return approach.
• E) If a project is rejected under the NPV approach, it would also be rejected under the payback approach.

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Definitions:

Large-Sample Z-Test

A statistical hypothesis test used when the sample size is large, generally over 30, utilizing the standard normal distribution.

Test Statistic

A value, derived from sample data, used in hypothesis testing to determine whether to reject the null hypothesis.

Rejection Region

The range of values for which the null hypothesis is rejected in hypothesis testing.

Wilcoxon Signed-Rank Test

A non-parametric statistical test used to compare two related samples to determine if their population mean ranks differ.