Which of the Following Is a Valid Reason for Managers

question 88

Multiple Choice

Which of the following is a valid reason for managers selecting negative-NPV projects?

• A) The NPV analysis includes a valuable real option to expand the project if things go well.
• B) If a firm has debt, managers may create value for shareholders by taking on some risky negative NPV projects.
• C) Managers' payoff functions represent the payoffs of lenders. By taking negative NPV projects, the managers can create value for lenders.
• D) Projects having negative NPV can have high internal rate of return.

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