Asked by Joshua Waterman on Jun 26, 2024
Verified
The difference between the market value of an investment and its cost is the:
A) Net present value.
B) Internal rate of return.
C) Payback period.
D) Profitability index.
E) Discounted payback period.
Market Value
The immediate cost at which services or assets are exchangeable in a free trading market.
Net Present Value
A financial metric that discounts all expected future cash flows to their present value to assess the viability or profitability of an investment.
Investment Cost
The total amount of money spent to acquire an investment, including all charges, fees, and acquisition expenses.
- Learn about the theory of Net Present Value (NPV) and its influence on selecting investments.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
A
Explanation :
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, essentially representing the difference between the market value of an investment and its cost.
Learning Objectives
- Learn about the theory of Net Present Value (NPV) and its influence on selecting investments.