The Primary Reason That a Company's Projects with Positive Net

question 14

Multiple Choice

The primary reason that a company's projects with positive net present values are considered acceptable is that:

• A)the required cash inflows exceed the actual cash inflows.
• B)they return the initial cash outlay within three years or less.
• C)the project's rate of return exceeds the rate of inflation.
• D)they create value for the owners of the firm.
• E)the investment's cost exceeds the present value of the cash inflows.

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Definitions:

Apparent Authority

A doctrine in law where a principal leads a third party to believe that an agent has the authority to act on the principal's behalf, even if the agent doesn't have actual authority.

Agency Contract

A legal agreement wherein one party (the agent) agrees to act on behalf of another party (the principal) in a business transaction or other matter.

Third Party

An individual or group not directly involved in a contract or legal transaction but could be affected by its outcome.

Agency Relationship

A legal and fiduciary relationship between two parties, where one (the agent) is authorized to act on behalf of the other (the principal) in business transactions.