Net Present Value (NPV) Is an Important Concept Used to Analyse

question 27

Multiple Choice

Net present value (NPV) is an important concept used to analyse capital investment projects. NPV can best be described as:

• A) the amount that should be used to discount the future cash flows to the present, and then compared with the current investment.
• B) the amount that must be invested now to earn a particular future value.
• C) the difference between the future cash inflows and the discounted cost of the investment.
• D) the difference between the discounted future cash inflows and the cost of the investment.

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