When Choosing Among Mutually Exclusive Projects, the Choice Is Easy

question 25

True/False

When choosing among mutually exclusive projects, the choice is easy using the NPV rule. As long as at least one project has positive NPV, simply choose the project with the highest NPV.

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Definitions:

Bond Issue

The process of offering bonds for sale to potential investors, typically to raise capital for a corporation or government.

Redeemed

The act of repaying or buying back something, such as repaying a loan, fulfilling a promise, or converting a financial security.

Unamortized Premium

The portion of the bond premium that has not yet been expensed to interest over the life of the bond.

Straight-Line Method

A depreciation technique which evenly spreads the cost of a fixed asset over its useful life.