Which of the Following Is TRUE of Discounted Cash Flow

question 152

Multiple Choice

Which of the following is TRUE of discounted cash flow methods like NPV and IRR?

• A) They use simple interest calculations.
• B) They assume that cash flows will be reinvested when received.
• C) They focus on the payback period.
• D) They must follow the rules of GAAP.

---

Definitions:

Availability Heuristic

An intellectual quick route based on the readily accessible examples in a person's thoughts during the appraisal of a specific subject, idea, technique, or judgment.

Lottery Tickets

Pre-purchased tickets for a lottery, a form of gambling where winners are selected by drawing of lots from among those who have paid money to participate.

Daily Drawings

A practice or exercise involving creating a drawing every day, often used to enhance artistic skills or for personal expression.

Weekly Drawings

A regular event, usually organized to select winners by a random draw, commonly used in lotteries or contests.