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In situations where the required rate of return is not constant for each year of the...

In situations where the required rate of return is not constant for each year of the project, it is advantageous to use

A. The adjusted rate-of-return method

B. The internal rate-of-return method

C. The net present value method

D. Sensitivity analysis

Solutions

Expert Solution

The correct answer choice is (C). The Net Present Value Method”

-In situations where the required rate of return is not constant for each year of the project, it is advantageous to use the Net Present Value Method.

-The Net Present Value (NPV) is the best measure of project profitability in Capital Budgeting Technique, It Doe does not provide much information about project risk.

-The NPV method considers the concept of time value of money for discounting the future cash inflows and it does not provide much information about project risk.

-The NPV method determines that the how much value that the Investment or projects added to the firms value and NPV is consistent with maximizing firm value.

ekkarill92 answered 2 years ago
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