Asked by Cynthia Frias on Jul 15, 2024
Verified
The net present value capital budgeting method considers all estimated cash flows for the project's expected life.
Net Present Value
A valuation method that calculates the present value of future cash flows generated by an investment, minus the initial investment cost.
Cash Flows
The movement of money into and out of a business, project, or financial product, considered essential for assessing the health and sustainability of an entity.
- Digest the workings of the net present value formula and its relevance to the financing of long-term investments.
Verified Answer
NH
Nehal HarsheJul 21, 2024
Final Answer :
True
Explanation :
The net present value method takes into account all expected cash flows over the life of the project, discounted to their present value.
Learning Objectives
- Digest the workings of the net present value formula and its relevance to the financing of long-term investments.
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