Accepting Positive NPV Projects Benefits the Stockholders Because

question 83

Multiple Choice

Accepting positive NPV projects benefits the stockholders because:

• A)it is the most easily understood valuation process.
• B)the present value of the expected cash flows are equal to the cost.
• C)the present value of the expected cash flows are greater than the cost.
• D)it is the most easily calculated.
• E)None of the above.

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Definitions:

Current Price

The present market value or selling price of a good, service, or asset.

Product

An item or service created as a result of a process, intended for the market.

Absorption Costing

A financial tracking approach that incorporates all costs associated with producing an item, such as direct materials, direct labor, along with all manufacturing overhead costs, whether they are fixed or variable.

Markup Percentage

The percentage added to the cost of goods to achieve a selling price, representing profit margin.