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You Are an Aerospace Defense Contractor and You Routinely Work

Question 78

Multiple Choice

You are an aerospace defense contractor and you routinely work projects for the U.S.Department of Defense that generate cash flows that by themselves,do not cover the cost of capital for the firm.One reason for this may be


A) because you can make up negative NPV projects by taking on more volume.
B) because the projects have an implicit option to work on non-defense related projects at a lower direct research cost than projects without defense related work.
C) because there is a taxable exemption from doing patriotic work.
D) none of the above.

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