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Managerial Accounting

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Basics of Net Present Value (NPV)

MGRACT-HKCFNM

Which of the following statements is/are true about Net Present Value (NPV)?

Select ALL that apply.

A

Net Present Value calculations apply time value of money concepts to future cash inflows and cash outflows.

B

Net Present Value calculations are used to evaluate a potential project's benefits and costs.

C

Net Present Value is calculated by discounting future net cash flows from the investment at the project's required rate of return and subtracting off the initial investment.

D

Net Present Value does not use the hurdle rate in its calculations.