Which of the Statements Below Is FALSE

question 97

Multiple Choice

Which of the statements below is FALSE?

• A) The net present value decision model is an economically sound model when comparing different projects across a wide variety of products, services, and activities under capital constraint.
• B) The greater the NPV of a project, the greater the "bag of money" for doing the project, and more money is better. If a company is short of capital, it would choose those projects that provide the largest "bag of money."
• C) Despite all of the advantages of using the NPV Model, it is inconsistent with the concept of the time-value-of-money.
• D) By discounting all future cash flows to the present, adding up all inflows, and subtracting all outflows, we are determining the current value of the project.

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period.

Stock Price

The cost per share at which a company's stock is bought and sold in the stock market.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash payments or additional stock.

Selling Price

The price at which goods or services are offered to buyers.