An estimate of an asset's value to the company, calculated by discounting the future cash flows from the investment at the project's required rate of return and then subtracting the initial amount of the investment, is known as:

A) Unamortized carrying value.

B) Rate of return on investment

C) Payback period.

D) Annual net cash fiows.

E) Net present value

Question

Business

Young

23 October, 12:10

An estimate of an asset's value to the company, calculated by discounting the future cash flows from the investment at the project's required rate of return and then subtracting the initial amount of the investment, is known as:

A) Unamortized carrying value.

B) Rate of return on investment

C) Payback period.

D) Annual net cash fiows.

E) Net present value

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Answers (1)

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Lexie Nelson · Answer 1

The correct answer is E that is NPV (Net Present Value)

Explanation:

NPV stands for Net Present Value is the term which is stated as the difference among the PV (Present Value) of cash outflows and the PV (Present Value) of cash inflows over a year of time.

It is an estimate for the value of asset to the company, computed by discounting the cash flows from the investment at the required rate of return, subtracting the initial amount of the investment.