By evaluating cost and benefits using competitive market prices,we can determine whether a decision will make the firm and its investors wealthier.This central concept is called:
A)the Law of One Price.
B)the Present Value.
C)the Valuation Principle.
D)the Internal Rate of Return.

Question

Quizplus · Accepted Answer

The Valuation Principle is the central concept that by evaluating cost and benefits using competitive market prices, we can determine whether a decision will make the firm and its investors wealthier. The Law of One Price is the principle that states that the price of the same product or asset should be the same in different markets. The Present Value is the value today of a future cash flow or series of cash flows, discounted at the appropriate rate. The Internal Rate of Return is the rate at which the net present value of an investment is zero. While all of these concepts are related to financial decision-making, the Valuation Principle specifically addresses the determination of wealth creation through cost-benefit analysis using market prices.

By Evaluating Cost and Benefits Using Competitive Market Prices,we Can