If the net present value of the investment is $8,510, then:
A)the rate of return is less than the cost of capital.
B)the present value of the cash flows is greater than the required investment.
C)the cost of capital is higher than the internal rate of return.
D)the present value of the cash flows is $8,510 less than the investment.

Question

Quizplus · Accepted Answer

The net present value (NPV) being positive ($8,510) indicates that the present value of the cash flows is greater than the required investment, meaning the investment is expected to generate more value than its cost.

If the Net Present Value of the Investment Is $8,510