Net Present Value Is Defined as the ________

question 20

Multiple Choice

Net present value is defined as the ________.

• A) combined value of the capital assets of a project and the sales projections
• B) difference between the present value of a firm's assets and the future project liabilities
• C) difference between the present value of a project's incremental cash flow and the initial investment
• D) combined value of a project's initial investment and its incremental cash flow

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Definitions:

Interest Rate

The fraction of a loan incurred as interest by the borrower, commonly indicated as a yearly percentage.

Grandchildren

The children of one's children, forming the third generation in a family lineage.

Future Value Factor

A factor used to calculate the future value of a cash flow at a certain rate of interest over a specific number of periods.

Interest Rate

is the percentage of principal charged by the lender for the use of its money or the return earned on deposit accounts.