The Net Present Value Always Provides the Correct Decision Provided

question 100

Multiple Choice

The net present value always provides the correct decision provided that

• A) cash flows are constant over the asset's life.
• B) the required rate of return is greater than the internal rate of return.
• C) capital rationing is not imposed.
• D) the internal rate of return is positive.

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Definitions:

Income Statement Columns

Income statement columns refer to the structured format used to present the revenues, expenses, and net profit or loss of a business over a specific period.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in net income or loss.

Net Income

The final earnings of a company after total revenue has had all taxes and expenses removed.

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.