Which of the following is true about the Net Present Value method?
A) The NPV does not utilize time value of money concepts.
B) The NPV assumes that all cash flows are reinvested at the firm's discount rate (the firm's cost of capital).
C) The NPV allows projects to be ranked by rate of return.
D) The NPV is a rate of return that is acceptable to the firm.
Answer: B
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FIN202 Chapter 10
- Which one of the following cash flow patterns is NOT an unconventional cash flow pattern?
- In evaluating capital projects, the decisions using the NPV method and the IRR method may disagree if
- When evaluating capital projects, the decisions using the NPV method and the IRR method will agree if
- The internal rate of return is
- Which one of the following statements about IRR is NOT true?
- Disadvantages of the payback method include the following.
- Advantages of the payback method include the following.
- Which one of the following statements about the discounted payback method is NOT true?
- Which ONE of the following statements about the payback method is true?
- To accept a capital project when using NPV,
- The net present value
- In computing the NPV of a capital budgeting project, one should NOT
- Which one of the following statements is NOT true?
- Which one of the following statements is NOT true?
- Capital rationing implies that
- Capital rationing implies that
- The cost of capital is
- If both projects are positive-NPV projects, then the firm should
- The firm's decision will be to
- Contingent projects would imply that
- Two projects are considered to be contingent projects if
- Two projects are considered to be mutually exclusive if
- Two projects are considered to be independent if
- Which of the following are aspects of independent projects?
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