Using the net present value method,mangers sum the present values of all expected future cash flows from the project and ________.
A)add the initial investment
B)subtract the initial investment
C)ignore the initial investment
D)add the depreciation expense

Question

Quizplus · Accepted Answer

By subtracting the initial investment from the sum of present values of all expected future cash flows, managers can determine whether the project generates positive or negative net present value. If the result is positive, then the project is expected to generate value for the shareholders.

Using the Net Present Value Method,mangers Sum the Present Values