The difference between the present value of the cash inflows and outflows associated with a project is the net present value model.

Question

Quizplus · Accepted Answer

This statement is true. The net present value (NPV) model is a financial method used to evaluate investment opportunities by comparing the present value of expected cash inflows with the present value of expected cash outflows. If the difference between the two is positive, then the project is considered financially viable and may be accepted. If the difference is negative, then the project is considered unprofitable and may be rejected. The NPV model takes into account the time value of money by discounting future cash flows to their present value using a discount rate.

The Difference Between the Present Value of the Cash Inflows