Which of the Following Is Considered an Advantage of the Net

question 63

Multiple Choice

Which of the following is considered an advantage of the net present value method of capital budgeting over the payback method?

• A)The NPV considers all cash flows.
• B)The NPV uses the firm's required rate of return to discount cash flows.
• C)The NPV method considers opportunity costs in its calculations.
• D)All of the above are considered advantages for the NPV method.

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Definitions:

Skewness

A measure of the asymmetry of the probability distribution of a random variable about its mean.

Kurtosis

A measure of the "tailedness" of the probability distribution of a real-valued random variable, indicating the sharpness of the peak of a frequency-distribution curve.

Variability

A measure of how spread out or dispersed the scores in a set of data are.

Spread

A statistical term describing the range or distribution of data points in a data set.