Which of the Following Statements Is Correct

question 100

Multiple Choice

Which of the following statements is correct?

• A) The project should be accepted since its NPV is $353.87.
• B) The project should be rejected since its NPV is -$353.87.
• C) The project should be accepted since it has a payback of less than four years.
• D) The project should be rejected since its NPV is -$23.91.

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Definitions:

Marketable Securities

Financial instruments that can easily be converted to cash quickly at a reasonable price.

Miller-Orr Model

A financial model used to manage cash flow and determine the optimal level of cash reserves for a firm.

Trading Costs

Expenses associated with buying and selling securities, including commissions, spreads, and slippage.

Collection Float

The time period between when a payment is initiated by a debtor and when the funds are actually available to the creditor.