Which of the Following Statements Regarding the Valuing of Costs

question 59

Multiple Choice

Which of the following statements regarding the valuing of costs and benefits is NOT correct?

• A)The first step in evaluating a project is to identify its costs and benefits.
• B)In the absence of competitive markets,we can use one-sided prices to determine exact cash values.
• C)Competitive market prices allow us to calculate the value of a decision without worrying about the tastes or opinions of the decision maker.
• D)Because competitive markets exist for most commodities and financial assets,we can use them to determine cash values and evaluate decisions in most situations.

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Definitions:

Total Value

The overall financial value of an entity or asset, calculated by summing all components of worth.

Lump Sum Payment

A large, one-time payment made for a particular purpose, rather than a series of smaller installments.

Compounded Annually

Interest on an investment or loan is calculated annually on both the initial principal and previously accumulated interest.

Loan

Borrowed capital that is expected to be repaid with interest by the borrower to the lender at a future date.