An Advantage of the Net Present Value Method for Evaluating

question 51

Multiple Choice

An advantage of the net present value method for evaluating investment proposals over the internal rate of return method is that:

• A)only one set of present value calculations using a required discount rate is made.
• B)the actual rate of return on the project is calculated.
• C)projects can be ranked in order of profitability using the net present value amount.
• D)estimates of future cash flows do not have to be made.

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Definitions:

Automatic Processing

Cognitive operations that occur without conscious awareness or effort, often developed through extensive practice or familiarity.

Apprentice

A person who is learning a trade from a skilled employer, having agreed to work for a fixed period at low wages.

Strong

The quality or state of being physically powerful or having a high degree of muscle strength.

Capable

Having the ability, power, or qualifications to do something effectively or achieve a specific outcome.