NPV is:

Question

NPV is:

Quizplus · Accepted Answer

NPV (Net Present Value) is a method used in capital budgeting to evaluate the profitability of an investment or project. It compares the value of the investment's cash inflows and outflows in present-day dollars, taking into account the time value of money. This means it discounts future cash flows back to their value in today's dollars and then compares this to the initial investment. Option B is incorrect because it describes the sum of future values, not their present value. Option D is incorrect because NPV can be negative if the discount rate is above the project's internal rate of return (IRR), not positive.

NPV Is