Capital Budgeting Decisions Use the Net Present Value Rule So

question 75

True/False

Capital budgeting decisions use the Net Present Value rule so that those decisions maximise net present value (NPV).

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Definitions:

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to changes.

Short Run

In economics, a period during which at least one of a firm's inputs is fixed and cannot be changed.

Fixed Input

An input in the production process that cannot be changed in the short term, such as buildings or land.

Long-Run Adjustment

A process in which firms adjust their inputs and outputs to achieve the optimal level of production and efficiency over an extended period.