Which One of the Following Statements Is Correct

question 63

Multiple Choice

Which one of the following statements is correct?

• A)Mergers benefit shareholders but not creditors.
• B)Positive NPV projects will automatically benefit both creditors and shareholders.
• C)Shareholders might prefer a negative NPV project over a positive NPV project.
• D)Creditors prefer negative NPV projects while shareholders prefer positive NPV projects.
• E)Mergers rarely affect bondholders.

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Definitions:

Activity Bases

Activity Bases refer to the measures used in activity-based costing for allocating fixed costs to products or services based on the activities that drive these costs.

Costs

The monetary value required to produce goods or services, including materials, labor, and overhead expenses.

Direct Labor

The labor costs directly associated with the manufacture of products or the provision of services, including wages of workers who can be directly linked to specific goods or services.

Variable Factory Overhead

Costs that fluctuate with the level of production, such as utilities and materials used in the manufacturing process.