There Are Two Distinct Discount Rates at Which a Particular

question 28

Multiple Choice

 There are two distinct discount rates at which a particular project will have a zero net present value. In this situation, the project is said to: 

• A) have two net present value profiles. 
• B) have operational ambiguity. 
• C) create a mutually exclusive investment decision.
• D) produce multiple economies of scale. 
• E) have multiple rates of return.

Calculate economic cost, including opportunity costs and sunk costs, in decision making.

Understand the impact of changes in production capacity on cost curves and firm's costs.

Apply the concept of user cost of capital and its components in the analysis of capital costs.

Analyze how the law of diminishing returns affects costs and the production function in the short run.

---

Definitions:

Equitable Estoppel

The principle that when a gratuitous promise to do something in the future causes a person who relies on that promise to incur an expense, the promisor will not be allowed to enforce other contractual rights that are inconsistent with that promise; the promise can only be used as a defense by the promisee; also known as promissory estoppel.

Natural Person

An individual human being, as opposed to a legal entity like a corporation or government.

Legal Bound

Being officially restrained by law or legally obliged to perform or refrain from performing certain actions.

Presumptions

Assumed facts or principles that are taken as true until disproven, often used in legal contexts.