Which of the Following Best Describes the Net Present Value

question 67

Multiple Choice

Which of the following best describes the Net Present Value rule?

• A) Take any investment opportunity where the net present value (NPV) is not negative; turn down any opportunity when it is negative.
• B) Take any investment opportunity where the net present value (NPV) exceeds the opportunity cost of capital; turn down any opportunity where the cost of capital exceeds the net present value (NPV).
• C) When choosing among any list of investment opportunities where resources are limited, always choose those projects with the highest net present value (NPV).
• D) If the difference between the present cost of an investment and the present value (PV) of its benefits after a fixed number of years is positive the investment should be taken, otherwise it should be rejected.

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Definitions:

Whole

A term typically used to describe something that is complete or entire, not missing any parts.

Line Chart

A type of chart which displays information as a series of data points called 'markers' connected by straight line segments, commonly used to visualize data trends over time.

Trends Over Time

The analysis or observation of changes and developments in specific data or phenomena during a period.

Shows

A term that could refer to displaying information on the screen or running a presentation or event in various contexts.