Unlike other methods,present value analysis indicates that a project should be undertaken if the NPV is greater than zero regardless the income distribution.
A) True
B) False
C) Uncertain

Question

Quizplus · Accepted Answer

Present value analysis is a tool used to evaluate the financial feasibility of an investment project. It calculates the present value of future cash flows that a project is expected to generate, and subtracts the initial investment to find the net present value (NPV) of the project. If the NPV is positive, it indicates that the project is expected to generate more cash than it costs, and therefore it should be undertaken. This decision is independent of the income distribution or any other external factors. Therefore, the statement is true.

Unlike Other Methods,present Value Analysis Indicates That a Project Should