The difference between the present value of an investment and its cost is the:
A)payback period.
B)internal rate of return.
C)net present value.
D)discounted payback period.
E)profitability index.

Question

Quizplus · Accepted Answer

Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows of an investment. It considers the time value of money and discount rate to evaluate whether an investment will increase the value of the business. A positive NPV indicates that the investment is profitable and acceptable, while a negative NPV means the investment should be rejected. Therefore, C is the best choice for the given question.

The Difference Between the Present Value of an Investment and Its