GENERAL KNOWLEDGE

Detailed explanation-1: -Net present value is the difference between the present value of cash inflows and cash outflows over a period of time. Both present value and net present value use discounted cash flows to estimate the current value of income.

Detailed explanation-2: -NPV Decision Rule NPV > 0-The present value of cash inflows is more than the present value of cash outflows. The money earned on the investment is more than the money invested. Hence, it is a good investment. NPV = 0-The present value of cash flows is more than the present value of cash outflows.

Detailed explanation-3: -Cash Inflow describes all of the income that is brought to your business through its activities– any strategy to bring profits into the business. Cash Outflow includes any debts, liabilities, and operating costs– any amount of funds leaving your business.

Detailed explanation-4: -Net present value is the difference between the present value of your cash inflows and the present value of your cash outflows over a given period. It is used in investment planning and capital budgeting to measure the profitability of projects or investments, similar to accounting rate of return (ARR).

Detailed explanation-5: -C = Future cash flow. r = Discount rate. n = Number of periods.