The Net Present Value Method Is a Better Method of Evaluation

question 99

Multiple Choice

The net present value method is a better method of evaluation than the internal rate of return method because:

• A) the NPV method discounts cash flows at the internal rate of return.
• B) the NPV method is a more liberal method of analysis.
• C) the NPV method discounts cash flows at higher than the firm's cost of capital.
• D) the NPV method allows the financial manager to select between mutually exclusive projects.

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Definitions:

Firm's Control

The extent to which a business can influence or dictate its operational environment, including internal processes and external market conditions.

Sociocultural Changes

Alterations in the social and cultural aspects of a society, which can impact consumer behavior, business practices, and market trends.

Two-Income Families

Households in which both partners are employed, contributing to the family's total income and economic status.

Consumer Confidence

A measure of how optimistic consumers are about the overall state of the economy and their own personal finances.