Which of the Following Is Not an Assumption in Performing

question 44

Multiple Choice

Which of the following is not an assumption in performing NPV calculations found in Chapter 11?

• A)The initial cash outflow takes place at the beginning of the period.
• B)The internal rate of return is zero.
• C)Subsequent cash inflows and outflows occur at the end of the relevant period.
• D)The mathematics of new present value calculations assume that firms reinvest future cash inflows in projects that yield a return that equals the cost of capital.
• E)All of the above are assumptions discussed in Chapter 11.

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Definitions:

Applied to Production

Pertaining to costs or accounting methodologies directly associated with the manufacturing or creation process of goods or services.

Work in Process Inventory

Goods partially completed but not yet ready for sale, particularly in manufacturing, representing an ongoing production stage.

Direct Materials

Basic substances that are specifically identifiable in the creation of a particular product.

Indirect Materials

Materials used in the production process but not directly traceable to a finished product, such as lubricants and cleaning supplies.