Suppose a new cost-saving device will generate 1,000 net savings per year to a firm. The device costs 10,000. Should the firm purchase the device?
A) definitely
B) absolutely not
C) The firm is indifferent between buying the device and not.
D) More information is required to answer.
Question 2
The Net Present Value approach to investment results in an investment being undertaken only if
A) its net present value is positive.
B) its net present value is zero.
C) it has positive cash flow.
D) its internal rate of return equals the rate of interest.