Which of the following is true of a project which has a present value of cash inflow of $20,000 and the present value of the cash outflows of $15,000 (given the assumptions made in calculating the costs and cash inflows)?
A) The project cannot be carried out as the outflow is high.
B) The net present value of the project is $35,000.
C) The project will require 5 years to break even.
D) The project generates wealth.

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated as the present value of cash inflows minus the present value of cash outflows. Here, NPV = $20,000 - $15,000 = $5,000, which is positive, indicating that the project generates wealth.

Which of the Following Is True of a Project Which