Which of the Following Is NOT a True Statement About

question 1

Multiple Choice

Which of the following is NOT a true statement about net present value (NPV) analysis?

• A) The NPV of a project is the sum of the present value of all future after-tax incremental cash flows generated by an initial cash outlay, minus the present value of the investment outlays.
• B) Projects that have a positive NPV should be accepted, and projects that have a negative NPV should be rejected.
• C) The NPV is the present value of the expected cash flows net of the costs needed to generate them.
• D) The firm's after-tax marginal cost of capital is the appropriate discount rate for all projects.

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Definitions:

Break-even

The point at which total costs equal total revenues, meaning there is no profit or loss.

Variable Cost

Variable cost is a cost that changes in proportion to the level of production or business activity, such as raw materials and direct labor.

Monthly Dollar Sales

The total revenue generated from sales, expressed in dollars, for a specific month.

Break-even

The moment when a business's total earnings match its total expenses, leading to neither profit nor loss.