Answered: Explain the Net Present Value relating…

Business

Accounting

Explain the Net Present Value relating to investment of funds in long term investments briefly.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14Q: What determines the anticipated interest rate payout for an investment?

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1. Explain the Net Present Value relating to investment of funds in long term investments briefly.

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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