The NPV of a project includes:

Question

Quizplus · Accepted Answer

The NPV (Net Present Value) of a project is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. Therefore, to calculate the NPV, we need to discount the expected cash flows of a project in the future to their present value using the company's cost of capital or the required rate of return on the investment. B is incorrect because we need to discount all the cash flows, not just the certain ones. C is also incorrect because we don't discount the variance of the cash flows, we only consider their expected values.

The NPV of a Project Includes