The Advantages of NPV Are All of the Following EXCEPT

question 8

Multiple Choice

The advantages of NPV are all of the following EXCEPT

• A) it can be used as a rough screening device to eliminate those projects whose returns do not materialize until later years.
• B) it provides the amount by which positive NPV projects will increase the value of the firm.
• C) it allows the comparison of benefits and costs in a logical manner through the use of time value of money principles.
• D) it recognizes the timing of the benefits resulting from the project.

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Definitions:

Assets

Resources owned or controlled by a business or individual, which are expected to produce future economic benefits.

Liabilities

Financial obligations or debts owed by a business or individual to others, which must be paid in the future.

Journalize

The act of recording business transactions in the chronological order of occurrence within the accounting journals.

Transactions

Economic activities or events that affect the financial position of a company, recorded in its accounting records.