Which of the following estimates the current value of the cash that will flow into a firm from a project in the future and deducts the amount of the initial outlay?
A) Analysis of long-term investment
B) Net present value (NPV)
C) Internal rate of return (IRR)
D) The accounting return on investment technique

Question

Quizplus · Accepted Answer

Net present value (NPV) estimates the current value of future cash flows by discounting them back to their present value and deducts the initial outlay from it. This helps in determining whether a project will bring in more cash than the cost of implementing it. The other options are different techniques for evaluating investment projects but do not specifically estimate the current value of future cash flows like the NPV method.

Which of the Following Estimates the Current Value of the Cash