The Net Present Value Method Is a More Conservative Technique

question 60

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) none of the other answers are correct

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Definitions:

Fiduciary Duties

Obligations of loyalty and care that one party, the fiduciary, owes to another, such as a trustee to its beneficiaries.

Corporate Resources

Assets, both tangible and intangible, that a corporation possesses and can utilize to achieve its objectives, including financial, human, and technological resources.

Corporate Policy

Guidelines and rules that govern how a corporation operates, including its principles, objectives, and procedures designed to achieve its goals.

Capital Structure

The mix of various forms of financing used by a firm to fund its overall operations and growth, including debt, equity, and any other financing sources.