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

Question

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When cash flows occur uniformly throughout each year, the NPV will be slightly understated but probably usable. This is because the NPV calculation assumes that all cash flows occur at the end of the year, which means that the present value of the cash flows is slightly lower than it would be if the cash flows occurred uniformly throughout each year.

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