Which of the Following Is Not a Benefit Associated with Using

question 47

Multiple Choice

Which of the following is not a benefit associated with using the NPV technique in capital budgeting?

• A)The NPV technique takes into account the time value of money.
• B)The NPV technique always selects projects that maximise shareholders' wealth.
• C)The NPV technique provides evaluation in percentage format,making it easier to interpret.
• D)The NPV technique considers all cash flows expected to be generated by the project and hence uses all available information.

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Definitions:

Blanket Liens

A security interest covering nearly all types of collateral owned by the debtor.

Compensating Balance

A minimum balance that must be maintained in a bank account, often required by banks in return for loans or as a condition for obtaining certain services.

Effective Annual Cost

This term refers to the total cost of borrowing on an annual basis, including interest and any fees, taking compounding into account.

Nominal Cost

The original cost of an asset or investment, not adjusted for inflation or other factors affecting its current value.