Net Present Value can be calculated for any time period provided that
A) both the interest rate and the time period correspond to the period being examined.
B) the interest rate is stipulated as an annual percentage but the time period corresponds to the period being examined.
C) the time period is stipulated as an annual period but the interest rate corresponds to the period being examined.
D) a spreadsheet is used for the calculation since this cannot be computed on a financial calculator.

Question

Quizplus · Accepted Answer

The Net Present Value formula takes into account both the interest rate and the time period, so both should correspond to the period being examined for an accurate calculation. Therefore, choice A is the best option. B and C have inconsistencies in either the interest rate or time period, and D is not necessarily true since Net Present Value can be computed on both financial calculators and spreadsheets.

Net Present Value Can Be Calculated for Any Time Period