The Net Present Value Profile

question 3

Multiple Choice

The net present value profile:

• A) doesn't work if projects have a negative net present value.
• B) is a substitute for the IRR.
• C) graphically portrays the relationship between the discount rate and the net present value.
• D) is determined by the cost of debt.

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Definitions:

Stock Dividend

A dividend payment made in the form of additional shares rather than cash.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Pre-split Price

The stock price of a company before it undergoes a stock split, which increases the number of shares while reducing the price per share.

Post-split Price

The adjusted price of a stock after a company has completed a stock split.