Which of the statements below best summarizes the main limitations of Net Present Value (NPV), as a criterion for evaluating an investment project? 

Question 5Answer 

a. Net present value does not take into account the value of money over time or the cash flows that arrive after the investment. 

b. Net present value is a function of net profits, not cash flows. vs.

c. Net present value assumes a variable discount rate over the life of the project. 

d. The net present value leads to a choice on an absolute and not relative amount and assumes a constant discount rate over the entire duration of the project 

e. Net present value does not take into account the investment cost of a project.