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      Question

      The Net Present Value (NPV) of a project

      is:
      A The sum of all future cash inflows. Correct Answer Incorrect Answer
      B The difference between PV of cash inflows and PV of cash outflows. Correct Answer Incorrect Answer
      C The ratio of PV of cash inflows to PV of cash outflows. Correct Answer Incorrect Answer
      D The internal rate of return of the project. Correct Answer Incorrect Answer
      E The payback period in present value terms. Correct Answer Incorrect Answer

      Solution

      NPV is a capital budgeting technique calculated by subtracting the present value of cash outflows (initial investment) from the present value of expected future cash inflows.

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