When Evaluating Projects Using NPV Approach, ________

question 29

Multiple Choice

When evaluating projects using NPV approach, ________.

• A) projects having lower early-year cash flows tend to be preferred at higher discount rates
• B) projects having higher early-year cash flows tend to be preferred at higher discount rates
• C) projects having higher early-year cash flows tend to be preferred at lower discount rates
• D) the discount rate and magnitude of cash flows do not affect the ranking by NPV approach

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Definitions:

Consistent

A statistical property indicating that as the size of the sample increases, the estimator converges in probability to the parameter being estimated.

Unbiased Estimators

Statistical estimators that, on average, accurately predict the value of a population parameter without systematic error.

Smallest Variance

The smallest degree of spread or dispersion of observations around the mean in a dataset, indicating less variability.

Relatively Efficient

Refers to a process or system that achieves its goals with comparatively minimal waste of time, resources, or energy.