The Net Present Value Criterion (NPV)specifies That a Manager Should

question 93

Multiple Choice

The net present value criterion (NPV) specifies that a manager should choose a project if ________.

• A)the annuity factor for five periods is positive
• B)the sum of its discounted cash flow is negative
• C)the costs are in line with expectations
• D)the sum of its discounted cash flow is positive
• E)the rate of return equals or exceeds the sum of its discounted cash flow

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Definitions:

Consolidated Statement

Another term for consolidated financial statements, which combine the financial data of a parent company with its subsidiaries into a single comprehensive reporting document.

Shareholders' Equity

The residual interest in the assets of a company after deducting liabilities, representing the ownership stake of shareholders.

Acquisition Date

The date on which control of the assets of the acquired entity is transferred to the acquirer.

Fair Values

The estimated market value of an asset or liability, reflecting the price at which it could be bought or sold in a current transaction between willing parties.