Business Finance Practice

Topics

Capital Budgeting Decisions
- NPV
- Payback Period
Capital Structure
Dividend Decision
- Financial Management
Financial Management
Financial Ratios
Sources Of Finance
Working Capital Management

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NPV : Business Finance MCQ Practice Questions & Answers (English) - ObjectiveMcq

Business Finance Practice

All Practice

Topics

Capital Budgeting Decisions
- NPV
- Payback Period
Capital Structure
Dividend Decision
- Financial Management
Financial Management
Financial Ratios
Sources Of Finance
Working Capital Management

PracticeBusiness FinanceCapital Budgeting DecisionsNPV

NPV in Business Finance : Practice MCQ Questions & Answers with Explanations

1 practice sets · Page 1 of 1

Business FinanceMediumCapital Budgeting DecisionsNPV

Which of the following statements about Net Present Value (NPV) is correct?

NPV ignores the time value of money

A positive NPV means the project should be rejected

NPV is the difference between the present value of cash inflows and the initial investment

NPV and IRR always give the same accept/reject decision

Correct Answer:

Explanation:

The correct answer is C: NPV is the difference between the present value of cash inflows and the initial investment.

NPV accounts for the time value of money by discounting future cash flows. A positive NPV indicates the project adds value and should be accepted; a negative NPV means it should be rejected. NPV and IRR may occasionally give conflicting decisions when evaluating mutually exclusive projects.