Which of the statements below is FALSE?
A) The net present value decision model is an economically sound model when comparing different projects across a wide variety of products, services, and activities under capital constraint.
B) The greater the NPV of a project, the greater the "bag of money" for doing the project, and more money is better. If a company is short of capital, it would choose those projects that provide the largest "bag of money."
C) Despite all of the advantages of using the NPV Model, it is inconsistent with the concept of the time-value-of-money.
D) By discounting all future cash flows to the present, adding up all inflows, and subtracting all outflows, we are determining the current value of the project.

Question

Quizplus · Accepted Answer

This statement is false because the NPV model is consistent with the concept of time-value-of-money, as it uses the discounted cash flow (DCF) method to account for the time value of money. The DCF method discounts all future cash flows to the present based on an appropriate discount rate, which reflects the time value of money. Therefore, statement C is incorrect.

Which of the Statements Below Is FALSE