With the net present value method of capital investment analysis cash flows are assumed to occur

Question

Quizplus · Accepted Answer

With the net present value method, cash flows are assumed to occur at the end of the period. This is because the present value of cash inflows and outflows is calculated based on a discount rate, which represents the time value of money. Therefore, cash flows occurring at the end of the period are more relevant for calculating the present value than cash flows occurring earlier in the period.

With the Net Present Value Method of Capital Investment Analysis