Question
Which of the following is true when using the net present value method to evaluate investments? a. If a project requires working capital, the working
Which of the following is true when using the net present value method to evaluate investments?
a. | If a project requires working capital, the working capital is ordinarily included as a cash inflow at the beginning of the project and a cash outflow as the end of a project. | |
b. | The discount rate is the maximum rate of return that the project must earn to be considered acceptable. | |
c. | An assumption of the net present value method is that cash flows can be immediately reinvested at a rate of return equal to the discount rate used to evaluate the project. | |
d. | Depreciation is ordinarily included as a cash outflow in each year of a projects life. |
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