The NPV of an investment is the discounted value of the economic rents that it is expected to produce.

Question

Quizplus · Accepted Answer

This is the definition of net present value (NPV) - the present value of expected cash inflows minus the present value of expected cash outflows. Economic rents are a measure of the excess return generated by an investment, over and above what is required to compensate investors for the time value of money and the perceived level of risk.

The NPV of an Investment Is the Discounted Value of the Economic