Question:
In project appraisal, Net Present Value (NPV) is calculated by:
In project appraisal, Net Present Value (NPV) is calculated by:
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NPV > 0 = Accept project, NPV < 0 = Reject project.
Updated On: Jul 3, 2025
- Subtracting initial investment from total cash inflows
- Dividing cash inflows by initial cost
- Subtracting present value of outflows from present value of inflows
- Adding future inflows without discounting
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The Correct Option is C
Solution and Explanation
NPV = PV of Cash Inflows – PV of Cash Outflows. It considers the time value of money — future cash flows are discounted back to present value using a discount rate. A positive NPV means the project is expected to generate profit above the cost of capital.
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