2016年美国CPA练习题精选：Business 11

　　Which of the following is an advantage of net present value modeling？

　　a. It is measured in time， not dollars.

　　b. It uses the accounting rate of return.

　　c. It uses accrual basis， not cash basis accounting for a project.

　　d. It accounts for compounding of returns.

　　答案：D

　　Explanation

　　Choice “d” is correct. The net present value method assumes that positive cash flows are reinvested at the hurdle rate thereby considering compounding.

　　Choice “a” is incorrect. The net present value method measures the value of capital investments in dollars and considers the time value of money.

　　Choice “c” is incorrect. Net present value uses the cash basis not the accrual basis.

　　Choice “b” is incorrect. The accounting rate of return is a method of capital budgeting evaluation separate and apart from the net present value method.