Net present value discounts the value of future cash flows. It recognizes the time value of money.

Name: Net present value discounts the value of future cash flows. It recognizes the time value of money.
Brand: Quizplus
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Question

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Net present value considers the fact that receiving money in the future is less valuable than receiving the same amount of money today, as there is a potential opportunity cost associated with waiting to receive the money. As a result, future cash flows are discounted to reflect their present value.

Net Present Value Discounts the Value of Future Cash Flows