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What Is the Reason for Calculating the Present Values of All

Question 28

Multiple Choice

What is the reason for calculating the present values of all the expected cash flows of a project?


A) So that the initial investment may be matched with the expected cash inflows in terms of the same monetary units with the same purchasing power.
B) To overcome the problem of recognising that $1 received in 2 years' time is worth more than $1 received now.
C) To overcome the problem of a fluctuating discount rate.
D) To remove any opportunity costs.

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