When the Net Present Value (NPV)of a Project Is Calculated

question 45

Multiple Choice

When the net present value (NPV) of a project is calculated based on the assumption that the cash flows occurred at the end of the year when they actually occurred uniformly throughout each year,the NPV will:

• A)Not be in error.
• B)Be slightly overstated.
• C)Be unusable for actual decision-making.
• D)Be slightly understated but probably usable.
• E)Produce an error the direction of which is undeterminable.

---

Definitions:

Third World

Third World is a term originally used to describe nations not aligned with the capitalist NATO bloc or the communist Warsaw Pact during the Cold War, now often referring to developing countries.

CIA

The CIA, or Central Intelligence Agency, is a civilian foreign intelligence service of the federal government of the United States, tasked with gathering, processing, and analyzing national security information.

Eisenhower Administration

The period of U.S. government from 1953 to 1961 under President Dwight D. Eisenhower, noted for its Cold War tensions and domestic developments.

Third World

A Cold War-era term originally used to describe countries that were neither aligned with NATO (First World) nor the Communist Bloc (Second World), often underdeveloped nations.