Question

Identify the simplifying assumptions usually made in net present value analysis.

a. AlI cash flows Other than the initial investment occur at the end of periods.
b. All cash flows generated by the investment project are immediately reinvested at a rate of return greater than the discount rate.
c. All cash flows generated by the investment project are immediately reinvested at a rate Of return equal to the discount rate,
d. All cash flows occur at the beginning of the periods,
e. The time value of money is ignored when evaluating investment proposals under the net present value analysis.

Answer 1

a

c

Step-by-step explanation:

net present value analysis is a capital budgeting method

It is used to analyse the profitability of an investment