The net present value method focuses on ________.
A) cash flows and discount rate
B) inventory cost and cost of capital
C) working capital and cost of capital
D) operating income and required rate of return

Question

Quizplus · Accepted Answer

The net present value method involves calculating the present value of expected cash flows and comparing them to the initial investment. To do this, both the cash flows and the discount rate (which includes the cost of capital) are important factors to consider. Inventory cost, working capital, operating income, and required rate of return may be relevant to other financial analyses, but they are not the focus of the net present value method.

The Net Present Value Method Focuses on ________