The NPV method of evaluating capital investments suggests that a project with positive net cash inflows that exceed the cost of the investment should be accepted.

Question

Quizplus · Accepted Answer

The NPV method takes into account the time value of money and calculates the present value of all future cash inflows and outflows. If the result is a positive number, the project is expected to generate a return that exceeds the cost of the investment and should therefore be accepted. If the result is negative, the project is expected to generate a return that is lower than the cost of the investment and should be rejected.

The NPV Method of Evaluating Capital Investments Suggests That a Project