NPV Analysis on a New Project Has Been Carried Out

question 19

Multiple Choice

NPV analysis on a new project has been carried out to identify the crude NPV and the NPV of the expansion option. Which other three types of analysis should be carried out?

• A) NPV of taking no action
• B) NPV of the abandonment option
• C) NPV of the timing option
• D) NPV of other option possibilities

---

Definitions:

General Ledger

A record of all financial transactions divided into accounts and usually compiled at the end of each month.

Balance Sheet

A financial statement that shows a firm’s assets, liabilities, and owner’s equity.

Income Statement

A financial statement that shows the revenue and expenses of a firm, allowing you to calculate the profit or loss produced in a specific period of time.

GAAP

Generally Accepted Accounting Principles; a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.