Which of the Following Formulas Regarding Net Present Value (NPV)is

question 39

Multiple Choice

Which of the following formulas regarding net present value (NPV) is correct?

• A)NPV + PV(benefits)= PV(Cost)
• B)NPV - PV(costs)= PV(benefits)
• C)NPV = PV(all project cash flows)
• D)NPV = PV(benefits)+ PV(costs)
• E)NPV -PV(benefits)- PV(costs)= 0

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Definitions:

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions to calculate net cash from operating activities.

Operating Activities

Transactions related to the primary activities of a business, such as selling goods and services, which are reflected in the cash flow statement.

Financing Adjustments

Changes made to financial statements to account for the costs and effects of financing activities, such as interest expenses and loan payments.

Common Stock

Equity ownership in a corporation, with voting rights and a residual claim on corporate earnings.