NPV analysis determines the capacity plan that would turn a profit in terms of the net difference between current investment and the present values of future cash flows.

Question

Quizplus · Accepted Answer

NPV analysis is used to determine the profitability of a project or investment, taking into account the time value of money. It compares the present value of expected future cash flows with the initial investment to determine whether a project is profitable or not. Based on the analysis, it can determine the optimal capacity plan for a business that would result in a net positive NPV.

NPV Analysis Determines the Capacity Plan That Would Turn a Profit