The Advantages of NPV Are All of the Following EXCEPT

question 8

Multiple Choice

The advantages of NPV are all of the following EXCEPT

• A) it can be used as a rough screening device to eliminate those projects whose returns do not materialize until later years.
• B) it provides the amount by which positive NPV projects will increase the value of the firm.
• C) it allows the comparison of benefits and costs in a logical manner through the use of time value of money principles.
• D) it recognizes the timing of the benefits resulting from the project.

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Definitions:

Output

The amount of goods or services produced by a company, industry, or economy within a certain period.

Variable Costs

Costs that vary directly with the level of output, such as raw materials and direct labor expenses.

Labor

The human effort, either physical or mental, employed in the production of goods and services.

Materials

Raw elements or substances used in the production or manufacturing of goods.