Fisher's Separation Theorem Means That

question 1

Multiple Choice

Fisher's separation theorem means that:

• A)a company can make an investment decision even if all shareholders do not agree.
• B)a company should invest beyond the point where the net present value of the marginal unit of investment is zero.
• C)a company should invest up to a point where the rate of return on the marginal unit of investment equals the market interest rate.
• D)none of the given options is correct.

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Definitions:

Regular Sales Price

Regular sales price refers to the standard price set for a product or service before any discounts or promotions are applied.

Salvage Value

An estimate of an asset’s value at the end of its useful life.

Incremental Analysis

The process of identifying the financial data that change under alternative courses of action.

Variable Costs

Costs that vary in total directly and proportionately with changes in the activity level.