Question

the net present value diagram shows the dependence of the net present value of an investment project on:
a. investment costs b.discount rates
c.the project implementation period
d. inflation expectations
e. cash flows of the project.

Answer 1

Answer:

What Is Net Present Value (NPV)?

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. NPV is the result of calculations used to find today’s value of a future stream of payments.

KEY TAKEAWAYS

Net present value, or NPV, is used to calculate the current total value of a future stream of payments.

If the NPV of a project or investment is positive, it means that the discounted present value of all future cash flows related to that project or investment will be positive, and therefore attractive.

To calculate NPV, you need to estimate future cash flows for each period and determine the correct discount rate.