The Net Present Value Method Is a More Conservative Technique

question 32

Multiple Choice

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method:

• A) discounts cash flows at the project's internal rate of return.
• B) concentrates on the liquidity aspects of investment projects.
• C) discounts cash flows at the firm's weighted average cost of capital.
• D) ignores cash flows after the payback period.

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