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The Net Present Value Method Can Only Be Used in Capital

question 117

True/False

The net present value method can only be used in capital budgeting if the expected cash flows from a project are an equal amount each year.


Definitions:

Earnings per Share

A company's profit divided by its number of common outstanding shares.

Book Value per Share

This is the equity available to common shareholders divided by the number of outstanding shares, indicating the value per share if the company were liquidated.

Return on Total Assets

A financial ratio that measures the efficiency of a company's use of its assets in generating profit, calculated as net income divided by total assets.

Price-earnings Ratio

A metric used in finance to compare a firm's present stock price with its earnings for each share.

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