{"id":33757,"date":"2024-04-15T09:21:14","date_gmt":"2024-04-15T09:21:14","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=33757"},"modified":"2024-04-15T09:21:14","modified_gmt":"2024-04-15T09:21:14","slug":"which-one-of-the-following-equates-the-present-value-of-cash-out-flows-and-the-present-value-of-expected-cash-inflows-from-a-project","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/which-one-of-the-following-equates-the-present-value-of-cash-out-flows-and-the-present-value-of-expected-cash-inflows-from-a-project\/","title":{"rendered":"Which one of the following equates the present value of cash out flows and the present value of expected cash inflows from a project?"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Net Present Value&#8221; option2=&#8221;Internal Rate of Return&#8221; option3=&#8221;Payback Period&#8221; option4=&#8221;Accounting Rate of Return&#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is: A. Net Present Value (NPV).<\/p>\n<p>Net present value (NPV) is a capital budgeting method that calculates the present value of all future cash flows (both positive and negative) from a proposed investment and compares it to the initial investment. A positive NPV indicates that the investment is expected to generate a profit, while a negative NPV indicates that the investment is expected to lose money.<\/p>\n<p>Internal rate of return (IRR) is a capital budgeting method that calculates the rate of return that makes the net present value of an investment equal to zero. A project with an IRR that is greater than the company&#8217;s cost of capital is considered to be a good investment.<\/p>\n<p>Payback period is a capital budgeting method that calculates the amount of time it takes for an investment to recover its initial cost. A shorter payback period indicates that an investment is more likely to be profitable.<\/p>\n<p>Accounting rate of return (ARR) is a capital budgeting method that calculates the ratio of average annual net income to average investment. A higher ARR indicates that an investment is more profitable.<\/p>\n<p>In conclusion, NPV is the only method that equates the present value of cash outflows and the present value of expected cash inflows from a project.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Net Present Value&#8221; option2=&#8221;Internal Rate of Return&#8221; option3=&#8221;Payback Period&#8221; option4=&#8221;Accounting Rate of Return&#8221; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[700],"tags":[],"class_list":["post-33757","post","type-post","status-publish","format-standard","hentry","category-business-finance","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Which one of the following equates the present value of cash out flows and the present value of expected cash inflows from a project?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-one-of-the-following-equates-the-present-value-of-cash-out-flows-and-the-present-value-of-expected-cash-inflows-from-a-project\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Which one of the following equates the present value of cash out flows and the present value of expected cash inflows from a project?\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Net Present Value&#8221; 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