The Net Present Value Method Is a Better Method of Evaluation

question 18

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 the firm's more conservative cost of capital.
• D) the NPV method includes accruals and other accounting discounts.

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Definitions:

Volume

The volume of space taken up by an object or material.

Volume Increases

A physical change where the amount of space that a substance or object occupies becomes larger.

Temperature

A measure of the thermal energy of a substance, indicative of how hot or cold the substance is.

Kinetic-Molecular Theory

A theory that explains the properties of gases in terms of the motion of very small particles, considering their collisions as perfectly elastic.