GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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This method can be applied where cash inflows are even
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It takes into account the objective of maximum profitability
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This method considers the entire economic life of the project
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All of the above
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Detailed explanation-1: -NPV provides an unambiguous measure. It estimates wealth creation from the potential investment in today’s dollars, given the applied discount rate. NPV accounts for investment size. It works for comparing marginal forestry investments to multi-billion-dollar projects or acquisitions.
Detailed explanation-2: -The obvious advantage of the net present value method is that it takes into account the basic idea that a future dollar is worth less than a dollar today. In every period, the cash flows are discounted by another period of capital cost.
Detailed explanation-3: -Answer and Explanation: All of the following are advantages of NPV except: C. it recognizes the timing of the benefits resulting from the project. This is not an advantage of NPV due to the fact that NPV results in a single valuation of the project but does not give any feedback as to when the cashflows will come in.