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:

Organizational Change

The process through which a company or institution changes its structure, strategies, operational methods, or culture to effect change within the organization and respond to internal and external pressures.

Reactive Change

Change that occurs in response to external pressures or unforeseen situations, as opposed to being planned in advance.

Planned Change

The deliberate effort to alter an organization or process in a controlled and structured manner.

Transformational Change

Refers to a comprehensive, radical shift in the operations, culture, or structure of an organization, aiming for improvements and adaptation to new market conditions or technological advances.