Which of the Following Best Describes the Net Present Value

question 106

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.
• E)If the NPV is positive and the initial investment will be recovered within a certain time period,the investment should be taken.

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Definitions:

Economic Policy

Refers to the actions that governments take in the economic field, including taxation, government spending, and the regulation of the economy.

Economic Status

The level of economic wealth, or prosperity, achieved by an individual, group, or country, often measured by income, wealth, and employment.

Technological Change

Refers to the process by which new technologies are developed and introduced, leading to improvements in productivity, efficiency, or quality in goods and services.

Skilled Labor

Workforce with specialized knowledge, training, and experience requiring advanced skills and education.