When a Firm Commences a Positive Net Present Value Project,you

question 31

Multiple Choice

When a firm commences a positive net present value project,you know:

• A)the project will pay back within the required payback period.
• B)the present value of the expected cash flows is equal to the project's cost.
• C)the inherent risks within the project have been ignored.
• D)that all the projected cash flows will occur as expected.
• E)the stockholders' value in the firm is expected to increase.

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Definitions:

Typical Firm

A representative entity in an industry or market that reflects the common attributes of businesses within that context.

Short Run

A period in economics where at least one input is fixed, meaning that firms can adjust production levels but not capacity.

Long-Run Average-Total-Cost Curve

A curve that shows the lowest cost at which a firm is able to produce a given level of output in the long run, when all inputs can be varied.

Workers

Individuals engaged in a task or activity, especially in the context of employment, to earn wages or salary.