Which of the following statements about the net present value is true?
A) It produces a percentage result that is easy to describe.
B) It has an inadequate reinvestment assumption.
C) It is likely that there will be more than one NPV for a project.
D) It may be used to select among projects of different sizes.

Question

Quizplus · Accepted Answer

The net present value can be used to compare and select projects of different sizes, as it takes into account the time value of money and considers all relevant cash flows over the project's life. Option A is incorrect because the net present value is not expressed as a percentage. Option B is incorrect because the net present value assumes reinvestment at the same rate as the project's cost of capital. Option C is also incorrect; there should only be one net present value for a given project.

Which of the Following Statements About the Net Present Value