Which of the Following Statements Regarding the NPV Decision Rule

question 12

Multiple Choice

Which of the following statements regarding the NPV decision rule is FALSE?

• A)Reject projects with a NPV of zero,as accepting them is equivalent to reducing firm value.
• B)When faced with a set of alternatives,choose the one with the highest NPV.
• C)Accept those projects with a positive NPV,as accepting them is equivalent to receiving their NPV in cash today.
• D)Reject those projects with a negative NPV.

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Definitions:

Income Before Interest

The earnings generated by a business before interest expenses are subtracted, indicating operational profitability.