When the Net Present Value (NPV) of a Project Is

Multiple Choice

When the net present value (NPV) of a project is calculated based on the assumption that the after-tax cash inflows occur at the end of the year when they actually occur uniformly throughout each year, the NPV will:

A) Not be in error.
B) Be slightly overstated.
C) Be unusable for actual decision-making.
D) Be slightly understated but probably usable.
E) Produce an error the direction of which is undeterminable.