An Important Advantage of the Net Present Value Method of Capital

question 82

Multiple Choice

An important advantage of the net present value method of capital budgeting over the internal rate-of-return method is:

• A)the net present value method is expressed as a percentage
• B)the net present values of individual projects can be added to determine the effects of accepting a combination of projects
• C)There is no advantage.
• D)Both A and B are correct.

---

Definitions:

Employee Wages

Compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Total Product Cost

The sum of all costs directly or indirectly related to creating a product, including material, labor, and overhead expenses.

Factory Overhead Cost

Indirect costs associated with manufacturing that are not directly tied to a specific product, such as utilities, maintenance, and factory equipment depreciation.

Direct Materials Cost

The expense incurred for raw materials that are directly incorporated into a finished product during the manufacturing process.