Which of the Following Is a Disadvantage of the Net

question 82

Multiple Choice

Which of the following is a disadvantage of the Net Present Value rule?

• A)Can be misleading if inflows come before outflows
• B)Not necessarily consistent with maximizing shareholder wealth
• C)Ignores cash flows after the cutoff point
• D)Relies on accurate estimate of the discount rate
• E)Often an incorrect decision will result

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Definitions:

Proactive Social Responsibility

A business approach where companies take the initiative to improve social welfare, beyond regulatory requirements.

Adverse Social Impacts

Negative effects on society that may result from certain actions or policies, such as increased inequality or damage to community cohesion.

Discretionary Responsibilities

Obligations that an individual or organization chooses to undertake voluntarily, beyond what is legally or contractually required.

Demand Legitimacy

The validity and legitimacy of a stakeholder’s interest in the organization.