Chapter 26, Problem 7DQ

To determine

Introduction:

Net Present Value Method:

The difference between the value of cash inflows and outflows at present from the proposed project or investment refers to the Net Present Value. It considers the time value of money and use the net present value as a benchmark to decide whether to accept or reject a project or proposed investment.

To State:

The reference to expected rate of return on investment if the present value of the expected cash inflows exceeds or less than the amount to be invested.