BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
in future value dollars, and the total inflow is “netted” against the outflow to see if the net amount is positive or negative
|
|
|
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
|
|
|
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
|
|
|
in future dollars, and the initial outflow is “netted” against the total inflow to see if the net amount is positive
|
Detailed explanation-1: -In the NPV Model, the present cash flows are discounted at the rate r, the cost of capital. C) In the NPV Model, most future cash flows are stated in present value or current dollars and the inflow is “netted” against the outflow to see if the net amount is positive or negative.
Detailed explanation-2: -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-3: -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-4: -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.