The Net Present Value Method of Project Evaluation Is Preferred

question 14

Multiple Choice

The net present value method of project evaluation is preferred to the internal rate of return method because:

• A)the internal rate of return method may give multiple rates of return or zero rates of return in some cases,but not for mutually exclusive projects.
• B)the internal rate of return method may give an inconsistent ranking due to the magnitude or timing of cash flows.
• C)most projects are independent rather than mutually exclusive.
• D)the internal rate of return method yields net present value profiles that do not intersect for mutually exclusive projects.

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Definitions:

Low-Income Developing

A term used to describe countries with lower levels of income and economic development in comparison to global averages.

Annual Per Capita Income

The average income earned per person in a given area in a specified year, calculated by dividing the area's total income by its population.

Democratic Republic

A form of government in which representatives elected by the people make and enforce laws and policies, but the head of state is usually a president.

Low-Income Developing

Refers to countries with low levels of income per capita, often characterized by limited economic development and facing challenges in poverty, health, and education.