Positive NPV Projects Exist Because

question 5

Multiple Choice

Positive NPV projects exist because:

• A) analysts select sufficiently low discount rates.
• B) most projects are unique and innovative.
• C) cash-flow projections are extended into the future.
• D) firms hold competitive advantages.

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Definitions:

Straight-Line Depreciation

A scheme for disbursing the expenditure of a physical property over its operational lifespan in equivalent annual quotas.

Capital Budgeting

The process of evaluating, comparing, and selecting the best projects to invest in to maximize a firm’s value, considering long-term investments.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency of the business.

Straight-Line Depreciation

A system for distributing the expense of a material asset across its lifespan in equal yearly payments.