Which of the Following Statements Regarding the NPV Decision Rule

question 65

Multiple Choice

Which of the following statements regarding the NPV decision rule is false?

• A) Reject projects with an NPV of zero, as accepting them is equivalent to losing the present value of the projects' costs.
• B) When faced with a set of alternatives, choose the one with the highest NPV.
• C) Accept those projects with a positive NPV, as accepting them is equivalent to receiving their NPV in cash today.
• D) Reject those projects with a negative NPV, as not doing them has NPV = 0.

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Definitions:

Herfindahl Index

A tool for measuring business sizes within their respective sectors, providing insight into the competitive landscape.

Four-firm Concentration Ratio

A measure that represents the market share of the four largest firms in an industry, used to assess the degree of competition and concentration in the market.

Mutual Interdependence

A situation in which entities rely on each other to a significant extent, particularly relevant in markets with a few dominant firms.

Antitrust Laws

Legislation enacted to prevent anti-competitive practices, monopolies, and to promote fair competition for the benefit of consumers.