The Decision You Should Take Regarding This Project Is

question 68

Multiple Choice

The decision you should take regarding this project is:

• A)reject the project since the NPV is negative.
• B)reject the project since the NPV is positive.
• C)accept the project since the IRR < 20%.
• D)accept the project since the IRR > 20%.

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Definitions:

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price.

Inferior Goods

Goods for which demand decreases as the income of the consumer increases, opposite to normal goods.

Normal Goods

Goods for which demand increases as the income of consumers increases, and vice versa, holding all other factors constant.

Laffer Effect

Refers to the economic theory proposing that there is an optimal tax rate that maximizes government revenue without hindering economic growth.