Whether the investment returns arrive in year 1 versus year 2 will not make a difference on the calculation of net present value.

Question

Quizplus · Accepted Answer

The timing of investment returns significantly affects the calculation of net present value (NPV) because NPV takes into account the time value of money, discounting future cash flows to their present value. Cash flows received earlier are valued more highly than those received later.

Whether the Investment Returns Arrive in Year 1 Versus Year