The difference between the present value of an investment and its cost is the:
A) Net present value.
B) Internal rate of return.
C) Payback period.
D) Proﬁtability index.
E) Discounted payback period.

Question

Quizplus · Accepted Answer

The present value of an investment is the value of the investment today, whereas the cost is the amount of money that needs to be invested today. Net present value is calculated by subtracting the cost from the present value of the investment, which represents the expected cash flows. Therefore, the correct answer is A, net present value.

The Difference Between the Present Value of an Investment and Its