When Using the Pure Play Approach for a Proposed Investment

question 92

Multiple Choice

When using the pure play approach for a proposed investment, a firm is primarily seeking a rate of return which:

• A) is based on the actual source of funds that will be used to fund the project.
• B) creates a positive net present value for the project.
• C) reflects the size and life of the project.
• D) most closely correlates with the proposed investment's internal rate of return.
• E) best matches the risk level of the proposed investment.

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