The Net Present Value Method Is

question 37

Multiple Choice

The net present value method is:

• A) Used to appraise a capital project's qualitative factors
• B) Used to show how long the initial investment will be at risk
• C) The sum of the cash inflows, discounted to time zero
• D) The sum of the projected cash inflows and outflows valued in today's dollars

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Definitions:

Cash Inflows

Money received by a company during a specific period from activities like sales, investments, financing, etc.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life.

Initial Cost

The initial expenditure involved in acquiring an asset or launching a project, not including operational or maintenance costs.

Equipment

Tools, machinery, and other durable assets used in the production of goods or services.