The NPV of a project will equal $0 when the present value of the annual FCFs from the project, PV (FCF), equals the present value of net nonrecurring investments.

Question

Quizplus · Accepted Answer

This is because the NPV formula calculates the difference between the present value of all future cash inflows (FCFs) and the present value of all future cash outflows, including net nonrecurring investments. When the NPV equals zero, it means that the present value of all expected cash inflows is equal to the present value of all expected cash outflows, including both recurring and nonrecurring investments.

The NPV of a Project Will Equal $0 When the Present