A Disadvantage of the NPV Method Is That

question 11

Multiple Choice

A disadvantage of the NPV method is that:

• A) the actual return in terms of the percentage of the investment outlay is not revealed.
• B) the timing of cash flows is not considered.
• C) it does not take into account all of the expected cash flows.
• D) all of the options are disadvantages of the NPV method.

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Definitions:

Shrinkflation

The process of items shrinking in size or quantity while their prices remain the same or increase.

Volume Maximization

A pricing objective that involves setting prices low to encourage a greater volume of purchases; also called penetration pricing.

Penetration Pricing

A pricing strategy aimed at entering a new market by setting a low price initially to attract customers and gain market share.

Escalator Clause

A section in a contract that provides for price increases if certain, specified conditions occur.