What Is the Limitation of Using the Net Present Value

question 12

Multiple Choice

What is the limitation of using the net present value for evaluating capital investment alternatives?

• A) Ignores the time value of money
• B) Does not consider cash flows
• C) Cannot be used to compare projects of different size
• D) All of the above are limitations of the net present value method.

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Definitions:

Pruning Effects

The neurological process in which unused neural connections in the brain are eliminated to make room for new, more efficient pathways, especially significant during adolescence.

Lateralization Effects

The differing functions or activities of the right and left hemispheres of the brain.

Primary Neurotransmitter

A principal chemical substance released by neurons to transmit signals across synapses to other neurons or muscles.

Limbic System

A group of brain structures, including the amygdala, hippocampus, basal ganglia, and hypothalamus. Because these brain structures are associated more with emotion than with reasoning, the limbic system is often described as the “emotion brain” (in contrast to the cerebral cortex, which some have dubbed the “reasoning brain”).