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.

Transform absolute value equations into equivalent linear equations.

Understand set notation and be able to express solution sets accurately.

Interpret mathematical expressions visually, matching graphs and intervals to inequalities.

Evaluate the validity of a proposed solution for an equation or inequality.

---

Definitions:

Risky Asset

An asset that has a significant degree of uncertainty in its returns, often leading to higher potential rewards and higher potential losses.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual data points differ from the mean.

Expected Rate

The anticipated return on an investment, factoring in the probability of various outcomes, including risks and rewards.

T-bill

Short for Treasury bill, a short-term government security issued at a discount from the par value and pays no interest before maturity, but is redeemed at its face value.