What Is the Reason for Calculating the Present Values of All

question 28

Multiple Choice

What is the reason for calculating the present values of all the expected cash flows of a project?

• A) So that the initial investment may be matched with the expected cash inflows in terms of the same monetary units with the same purchasing power.
• B) To overcome the problem of recognising that $1 received in 2 years' time is worth more than $1 received now.
• C) To overcome the problem of a fluctuating discount rate.
• D) To remove any opportunity costs.

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Definitions:

National Drug Store

A national drug store is a retail pharmacy chain that operates multiple locations across a country, providing medications, health products, and health care services.

Warehousing

The act of storing goods in a dedicated space for the purposes of distribution, inventory management, and cost efficiency.

Logistics System

A network designed to control the movement and storage of goods and services from origin to consumption.

Transportation

The movement of goods or people from one location to another, which is a critical component of the supply chain.