An investment is worthwhile if the sum of the present value of benefits exceeds the sum of the present value of costs.

Question

Quizplus · Accepted Answer

This statement is true as the present value of benefits should be higher than the present value of costs for an investment to be profitable. This concept is based on the time value of money, which means that money received in the future is worth less than money received today. Therefore, the present value of future cash flows must be calculated to determine the profitability of an investment.

An Investment Is Worthwhile If the Sum of the Present