Asked by Angelina Carbonell on Jul 12, 2024
Verified
Which of the following cash flows is not considered when using the net present value method?
A) Future cash inflows.
B) Future cash outflows.
C) Past cash outflows.
D) Non-uniform cash inflows.
E) Future year-end cash flows.
Net Present Value Method
The Net Present Value Method is a financial analysis tool used to evaluate the profitability of an investment by calculating the present value of expected future cash flows minus the initial investment cost.
Future Cash Inflows
Projected future earnings or receipts in cash form, anticipated from investments, operations, or financing.
Cash Outflows
Money paid out by a business for its operational and investment activities.
- Analyze the effects of non-uniform cash flows on the net present value calculations.
Verified Answer
CG
corina guzmanJul 15, 2024
Final Answer :
C
Explanation :
The net present value method only considers future cash inflows and outflows, not past cash outflows. The focus is on how much cash flow an investment will generate in the future, not how much has already been spent.
Learning Objectives
- Analyze the effects of non-uniform cash flows on the net present value calculations.