When calculating the NPV of a project, you should use only
A)expected cash flows and promised rates of return
B)expected cash flows and expected rates of return
C)promised cash flows and expected rates of return
D)promised cash flows and promised rates of return

Question

Quizplus · Accepted Answer

The NPV calculation requires the use of expected cash flows, which are the estimated future cash inflows and outflows associated with the project. It is important to use expected rates of return, as opposed to promised rates of return, as the latter may not reflect the true risk or uncertainties associated with the project. Therefore, the best choice is to use expected cash flows and expected rates of return. When calculating the NPV of a project, it is important to use expected cash flows and expected rates of return. Promised rates of return may not always be guaranteed, and promised cash flows may not always be accurate. Therefore, using expected values will give a more realistic estimation of the project's financial outcome.

When Calculating the NPV of a Project, You Should Use