Question
1
of 52
1.5 points
Wsovi
In the project which yields the highest
rate of return is selected.
(d) Discounted cash flow
(b) pay-back period
(c) accounting rate of return method
(a) net present value method
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Answers
Answer:
a) Net present value b) Average rate of return c ) Internal rate of return d) Payback period. 9. Internal rate of return is … a) Rate at which ...
Answer:
In Net value method yields the highest
rate of return is selected.
Explanation:
Net present value (NPV) is a method used to determine the present value of all future cash flows generated by a project, including the initial capital investment. It is widely used in capital budgeting to determine which projects are likely to generate the most profit.
The formula for net present value changes depending on the number and consistency of future cash flows.
Net present value is a capital budgeting analysis techniques used to determine whether a long-term project will be profitable. The premise of the NPV formula is to compare the initial investment with the future cash flows of the project.
An important aspect of the NPV formula is the consideration that $1 today is not worth the same as $1 tomorrow. Because money today can be used to generate returns in the future, an amount of money today is worth more than the same amount of money in the future.
In general, the NPV formula tries to extract all the future values of the cash flows to what each cash flow is worth today. Then the NPV formula compares the value of these cash inflows to the initial investment or cash outflow.
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