The Net Present Value Method of Evaluating Proposed Investments

question 24

Multiple Choice

The net present value method of evaluating proposed investments:

• A) discounts cash flows at the minimum rate of return.
• B) measures a project's time adjusted rate of return.
• C) ignores cash flows beyond the payback period.
• D) applies to only mutually exclusive investment proposals.

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Definitions:

Unilateral Contract

A contract in which only one party promises to perform without requiring a reciprocal promise to act from the other party.

Bilateral Contract

A legally binding agreement involving two parties where each is obligated to fulfill their respective promises or actions.

Enforceable Agreement

A contract or agreement that can be upheld and compelled by law.

Mirror-Image Rule

A contract law principle stating that an acceptance must exactly match the terms of the offer for a legally enforceable agreement to exist.