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Which One of the Following Is a Disadvantage of the Net

Question 36

Multiple Choice

Which one of the following is a disadvantage of the net present value method of capital investment appraisal?


A) Can be used in conjunction with the payback method of capital investment appraisal to determine when the discounted cash flows from a project pay back the original cost of the investment in that project.
B) Discounts all cash inflows and outflows associated with a project into a common currency.
C) Makes a large number of assumptions about cash flows and the cost of capital.
D) Cannot be used in situations where cash flows turn from being inflows to outflows and back again.

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