The Net Present Value Method Takes into Account Which of the Following

question 4

Multiple Choice

The net present value method takes into account which of the following? $\begin{array} { c c } \begin{array} { c } \text { Cash Flow over } \\\text { Life of Project }\end{array} & \begin{array} { r } \text { Time Value } \\\text { of Money }\end{array} \\\text { A) No } & \text { Yes } \\\text { B) No } & \text { No } \\\text { C) } \text { Yes } & \text { No } \\\text { D) Yes } & \text { Yes }\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Yield to Maturity

Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures, considering all payments from now until maturity, including coupon payments and the difference between the purchase price and the par value.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value, to the bondholders.

Face Value

Face value is the nominal value stated on a financial instrument such as a bond or a stock certificate, important in determining its maturity value or dividend payments.

Required Rate

The minimum expected rate of return on an investment, necessary to compensate for the risk taken.