Which of the Following Statements Is False

question 55

Multiple Choice

Which of the following statements is false?

• A) The profitability index rule of thumb raises the bar on the NPV to take into account the option to wait.
• B) In practice, correctly modeling the sources of uncertainty and the appropriate dynamic decisions usually requires an extensive amount of time and financial expertise.
• C) Some firms use the following rule of thumb: invest whenever the profitability index is below a specified level.
• D) Instead of raising the bar on the NPV, the hurdle rate rule raises the discount rate.

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Definitions:

Internet Auction

An online platform where goods and services are sold to the highest bidder through competitive bidding processes.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in its price.

Marginal Cost

The increase in cost that arises from the production of one additional unit of a good or service.

Urban Professionals

A group of highly educated workers who typically work in professions found in urban centers, such as finance, law, and technology.