Asked by Jennifer Zuniga on May 26, 2024
Verified
_________ quantifies, in dollar terms, how stockholder wealth will be affected by undertaking a project.
A) Discounted payback analysis.
B) The average accounting return.
C) The internal rate of return.
D) Net present value.
E) The profitability index.
Stockholder Wealth
The total value of all financial assets owned by the shareholders of a company, often measured by the market value of the shares held.
Net Present Value
A method used in capital budgeting to evaluate the profitability of an investment or project, considering the time value of money.
Project
A temporary endeavor undertaken to create a unique product, service, or result with defined beginning and end.
- Gain an understanding of the Net Present Value (NPV) concept and its role in investment decisions.
Verified Answer
VN
Vaibhav NemaniMay 31, 2024
Final Answer :
D
Explanation :
Net present value (NPV) quantifies in dollar terms how stockholder wealth will be affected by undertaking a project by considering the present value of its cash flows minus the initial investment.
Learning Objectives
- Gain an understanding of the Net Present Value (NPV) concept and its role in investment decisions.