Which of the following statements is (are)true regarding the net present value of a capital investment?
I.Net present value does not consider time value of money.
II.A positive net present value represents an increase in value to the firm.
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

I is false as net present value does consider the time value of money, i.e. it discounts future cash flows to their present value. II is true as a positive net present value indicates that the present value of the cash inflows from the investment is higher than the present value of the cash outflows, which adds value to the firm.

Which of the Following Statements Is (Are)true Regarding the Net