The net present value of an investment is best defined as the

Question

Quizplus · Accepted Answer

The net present value (NPV) of an investment is calculated by subtracting the cost of the investment from the present value of its expected future cash flows. This takes into account the time value of money and provides a measure of the investment's profitability or potential return. A positive NPV indicates that the investment is expected to generate more cash inflows than outflows and is therefore desirable, while a negative NPV suggests that the investment is likely to result in a net loss and should be avoided. Therefore, the correct choice is C, the present value of the investment's future cash flows minus the investment's cost.

The Net Present Value of an Investment Is Best Defined