The Net Present Value (NPV) of an Activity or Project

question 82

Multiple Choice

The net present value (NPV) of an activity or project is:

• A) equal to the future value of all the revenues minus the present value of all the costs associated with it.
• B) equal to the present value of all the revenues minus the present values of all the costs associated with it.
• C) equal to the present value of all the revenues minus the future values of all the costs associated with it.
• D) equal to the future values of all the revenues minus the future values of all the costs associated with it.

---

Definitions:

Goodwill

A non-physical asset that is recognized when one company purchases another at a price higher than the sum of the net value of its identifiable assets.

Acquisition Method

An approach in accounting for business combinations where the acquiring entity is treated as having purchased the net assets of the acquiree.

Direct and Indirect Costs

Direct costs are directly traceable to a product or service, while indirect costs are not directly attributable to a single product or service, such as overhead expenses.

Business Combination

A transaction or other event in which an acquirer gains control over one or more businesses, which can include mergers, acquisitions, and consolidations.