The Net Present Value Method Differs from the Internal Rate

question 34

Multiple Choice

The net present value method differs from the internal rate of return method in that:

• A)the net present value method discounts cash flows using the risk-free rate of return and the internal rate of return method does not.
• B)the internal rate of return method finds the rate of return that results in a zero net present value.
• C)both methods yield similar conclusions for mutually exclusive projects.
• D)the net present value method discounts cash flows by the required rate of return,whereas the internal rate of return method does not take into account the time value of money.

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Definitions:

Behaviour

The way in which an individual acts or conducts themselves, especially towards others.

Negative Reinforcement

A behavioral principle where the removal of an unfavorable outcome or stimulus following a desired behavior increases the likelihood of that behavior being repeated.

Punishment

A consequence applied to decrease or eliminate a behavior or action considered undesirable.

Acquisition

The process of gaining possession or control of another company or business entity.