The net present value of a project is projected at $210.How should this amount be interpreted?
A)The project's cash inflows exceed its outflows by $210.
B)The project will return an accounting profit of $210.
C)The project's discounted cash flows are $210 less than its undiscounted cash flows.
D)The project will increase the firm's cash account by $210 when the project is started.
E)The project is earning $210 in addition to the project's required rate of return.

Question

Quizplus · Accepted Answer

The net present value (NPV) of $210 indicates that the project is expected to generate $210 more than the required rate of return, thus adding this amount to the firm's value.

The Net Present Value of a Project Is Projected at $210.How