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Which of the following statements regarding Net Present Value​ (NPV) is​ INCORRECT? A. When faced with...

Which of the following statements regarding Net Present Value​ (NPV) is​ INCORRECT? A. When faced with a set of​ alternatives, choose the one with the lowest NPV in order to minimize the present value of costs. B. The NPV represents the value of the project in terms of cash today. C. Good projects will have a positive NPV. D. The NPV of a project is the difference between the present value of its benefits and the present value of its costs.

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Analysis of each options A. When faced with a set ofalternatives, choose the one with the lowest NPV in order to minimize the present value of costs - Incorrect statement, since using NPV for decision making projects with highest NPV is selected over the Lowest project NPV. B. The NPV represents the value of the project in terms of cash today Correct, since the discount factor used for Net present value (NPV) decision making is for discounting the cashflows to today. C. Good projects will have a positive NPVCorrect, generally projects which are goods will have a positive NPVs over the others. D. The NPV of a project is the difference between the present value of its benefits and the present value of its costs.-Correct, Net present value is found out by discounting the cashflows (Cash Inflows and Cash outflows) to the present value and from the PV of cash inflows; PV of cash outflows will be subtracted So answer is Option A).

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