Question

The value of a firm.... Multiple Choice A. is unaffected by the value of any one...

The value of a firm....

Multiple Choice

A. is unaffected by the value of any one individual project.

B. is equal to the sum of all of the future cash flows derived from the firm’s projects.

C. equals the sum of the individual values of the firm’s projects and divisions.

D. increases anytime a project with a zero net present value is accepted.

E. increases when a new project with a negative net present value is accepted.

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Answer #1

C.equals the sum of the individual values of firm's projects and divisions.

the value of a firm is sum of the individual values of the firm's projects and division in the firm.

The value of firm is affected by any individual project.

sum of future cash flows is not as good a measure as present value of cash flows.

value of firm does not increase with zero NPV project acceptance.

value of firm decrease when a new project with a negative net present value is accepted.

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