BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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in future value dollars, and the total inflow is “netted” against the outflow to see if the net amount is positive or negative
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in present value or current dollars, and the total inflow is “netted” against the initial outflow to see if the net amount is positive or negative
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in present value or current dollars, and the outflow is “netted” against the total inflow to see if the gross amount is positive or negative
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in future dollars, and the initial outflow is “netted” against the total inflow to see if the net amount is positive
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Detailed explanation-1: -Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
Detailed explanation-2: -NPV will always decrease. For a given stream of expected cash flows, the net present value (NPV) of a project is inversely related to the discount rate. Hence, an increase in the discount rate from 8% to 10% will always lead to a decrease in the net present value (NPV).
Detailed explanation-3: -The Net Present Value (NPV) is a method that is primarily used for financial analysis in determining the feasibility of investment in a project or a business. It is the present value of future cash flows compared with the initial investments.