Net present value is the preferred method of analyzing a project even though the cash ﬂows are
only estimates.

Question

Quizplus · Accepted Answer

Net present value takes into account the time value of money and provides a method for comparing the profitability of different projects by discounting future cash flows back to their present values. Although cash flows are estimates, the use of net present value allows for better decision making because it considers the potential returns over time and the cost of financing the project.

Net Present Value Is the Preferred Method of Analyzing a Project