Which of the following is not a step in the net present value approach to capital budgeting?
A)Identify the amount and timing of each cash flow.
B)Determine the appropriate discount rate.
C)Compare the discount rate to the hurdle rate.
D)Calculate the net present value of the project.

Question

Quizplus · Accepted Answer

While comparing the discount rate to the hurdle rate is an important consideration in capital budgeting, it is not a direct step in the net present value approach. The steps in the net present value approach are to identify the cash flows, determine the appropriate discount rate, and calculate the net present value of the project.

Which of the Following Is Not a Step in the Net