Using the Net Present Value Method, the Decision Rule for Projects

question 25

Multiple Choice

Using the Net Present Value method, the decision rule for projects when finance is not a restriction is:

• A)take on all projects with a positive NPV.
• B)select the project with the largest cash inflows.
• C)select the project where the cash inflows are greatest in the early years of the project.
• D)select the project with cash flows equal to the initial investment.

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Definitions:

Home Prices

Refers to the cost at which houses are bought and sold in the real estate market.

Null Hypothesis

A default hypothesis in statistical inference that suggests no statistical significance or effect exists within a set of observations.

Significance Level

A threshold in hypothesis testing that determines the probability of rejecting the null hypothesis when it is actually true, commonly denoted as alpha (α).

One-Way ANOVA

A statistical test used to compare the means of three or more independent groups to determine if there is a significant difference among them, based on one independent variable.