The net present value estimates the rate of return on a project, given the level of expenditure and the timing and amount of cash inflows and outflows.

Question

Quizplus · Accepted Answer

The net present value (NPV) calculates the difference between the present value of cash inflows and outflows over a period of time, not the rate of return. The internal rate of return (IRR) is used to estimate the rate of return.

The Net Present Value Estimates the Rate of Return on a Project