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Author Question: Which of the following statements best describes externalities? (Read 39 times)

jojoperlo_

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on: Aug 7, 2023
Which of the following statements best describes externalities?

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An externality is a situation where a project would have an adverse effect on some other part of the firm or on the environment. If the project would have a favourable effect on other operations, then this is not an externality.


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The NPV method automatically deals correctly with externalities, even if the externalities are not specifically identified, but the IRR method does not. This is another reason to favour the NPV.


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An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank’s other offices to decline.


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Identifying an externality can never lead to an increase in the calculated NPV.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by jojoperlo_ on Aug 7, 2023

zubair1583

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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jojoperlo_

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it

lcapri7

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Reply 3 on: Yesterday
Excellent

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