The net present value method of capital budgeting analysis does all of the following except:
A)incorporate risk into the analysis.
B)consider all relevant cash flow information.
C)discount all future cash flows to their current value.
D)consider the initial cost of the project.
E)provide a specific anticipated rate of return.

Question

Quizplus · Accepted Answer

The net present value method of capital budgeting analysis does not provide a specific anticipated rate of return. Instead, it calculates the present value of all future cash inflows and outflows, considering the time value of money and the initial cost of the project, to determine whether the project is a worthwhile investment. While it does incorporate risk into the analysis, consider all relevant cash flow information and discount future cash flows, it does not provide a specific anticipated rate of return.

The Net Present Value Method of Capital Budgeting Analysis Does