If a Firm Finds That the Net Present Value of a Project

question 34

Multiple Choice

If a firm finds that the net present value of a project is _____ for a given interest rate, it will _____ the project.

• A)positive; undertake
• B)positive; not undertake
• C)negative; undertake
• D)positive or negative; undertake

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Definitions:

Small Firms

Small firms refer to businesses with a relatively smaller size or scale of operations, often characterized by limited revenue, assets, or number of employees compared to larger corporations.

Large Firms

Refers to companies with a high market capitalization, indicating their large size in terms of total asset value and overall market presence.

Reversal Effect

The tendency of poorly performing stocks and well-performing stocks in one period to experience reversals in following periods.

Buy Bonds

The act of purchasing bonds, which are debt securities, as a form of investment.