A Financial Manager Who Does Not Follow the General Constraints

question 15

Multiple Choice

A financial manager who does not follow the general constraints of the NPV rule may:

• A)accept a negative NPV project for fear of losing an investment opportunity.
• B)accept a marginally acceptable NPV project limiting the corporation's ability to choose a competing project.
• C)not consider all options available in a capital budgeting decision.
• D)not take a positive NPV project even if the NPV is adequate reward to forego the option.
• E)All of the above.

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Definitions:

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Economic Disadvantages

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Repressive Coping Style

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