The net present value (NPV)is _______.
A)present value of the future operating profits from an investment plus the present value of the cost of the investment
B)future operating profits from an investment plus the cost of the investment
C)future operating profits from an investment minus the cost of the investment
D)present value of the future operating profits from an investment minus the present value of the cost of the investment

Question

Quizplus · Accepted Answer

NPV is calculated as the present value of the future operating profits from an investment minus the present value of the cost of the investment. This calculation takes into account the time value of money and compares the potential return of an investment to the initial cost of that investment. A positive NPV indicates that the investment is potentially profitable, while a negative NPV indicates that the investment would not be a wise use of resources.

The Net Present Value (NPV)is _______