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MCQ Detailed View

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1 FINANCE MCQS

In capital budgeting, the technique based on discounted cash flows is called ____________?

  • Net Present Value (NPV) method
  • Net Future Value method
  • Net Capital Budgeting method
  • Net Equity Budgeting Method
Correct Answer: A. Net Present Value (NPV) method

Detailed Explanation

The Net Present Value (NPV) method is a capital budgeting technique that uses discounted cash flows to determine the present value of future project inflows compared to the initial investment. It helps businesses evaluate whether a project will add value based on the time value of money.

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