Answer-The Net Present Value (NPV) of a project is:

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.

Question

The Net Present Value (NPV) of a project

is:

A The sum of all future cash inflows.

B The difference between PV of cash inflows and PV of cash outflows.

C The ratio of PV of cash inflows to PV of cash outflows.

D The internal rate of return of the project.

E The payback period in present value terms.

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The Net Present Value (NPV) of a project

Solution