The net present value method can be used in situations where the required rate of return varies over the life of the project.

Question

Quizplus · Accepted Answer

The net present value method takes into account the time value of money by discounting future cash flows to their present value using a required rate of return. This required rate of return may vary over the life of the project, and the net present value calculation can adjust for this by using different discount rates for different periods. Therefore, the statement is true.

The Net Present Value Method Can Be Used in Situations