Question

The Chief Financial Officer of Five Star Food Distributors has asked you to evaluate the building of a new warehouse. As an astute student of business you explain that the best way to evaluate the project is to use _____ This common method adds the present value of all of the estimated future cash flows; then, it subtracts the initial costs of the investment to determine whether the proposed project is a good idea.

Answer 1

The answer is "net present value".

Net Present Value (NPV) is the estimation of all future cash flows (positive and negative) over the whole existence of a venture limited to the present. Net Present Value examination is a type of natural valuation and is utilized widely crosswise over back and representing deciding the estimation of a business, speculation security, capital task, new pursuit, cost decrease program, and anything that includes income.