The Net Present Value Method of Capital Budgeting Is Preferred

question 33

Multiple Choice

The net present value method of capital budgeting is preferred over the internal rate-of-return method because ________.

• A) the net present value method is expressed as a percentage of initial investment
• B) the net present values of individual projects can be added to determine the effects of accepting a combination of projects
• C) the percentage return computed under the net present value method is very easy to compare
• D) the calculation under the net present value method is easy as it does not use time value of money

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