Which of the Following Is True About the Net Present

question 50

Multiple Choice

Which of the following is true about the net present value (NPV) capital budgeting technique?

• A)The NPV capital budgeting technique ignores the time value of money.
• B)When projects are evaluated using the NPV formula, it shows by how much a firm's future value will decrease if a capital budgeting project is purchased.
• C)The NPV calculation is based on the assumption that the rate at which cash flows can be reinvested is the project's internal rate of return.
• D)The NPV calculation fails to assume a realistic reinvestment rate assumption (the required rate of return), which is implicit in the internal rate of return calculation (IRR).
• E)If the net benefit computed on a present value basis-that is, NPV-is positive, then the asset (project) is considered an acceptable investment.

---

Definitions:

Raw Materials

The fundamental components or inputs used in the production of goods.

Product Service

A combination offering that includes both tangible products and intangible services, designed to meet specific customer needs.

Communication Standard

Established protocols or guidelines that allow different communication systems to work together effectively, ensuring compatibility and interoperability.

Supply Chain

Involves all the steps involved in getting a product from a raw material to the customer, including production, transportation, and distribution.