Question

Two investment opportunities have positive net present values. Investment A’s net present value amounts to $40,000 while B’s is only $30,000. Does this mean that A is the better investment opportunity? Explain.

Answer 1

Yes. A is the better investment opportunity

Reason : It has the highest net present value

Step-by-step explanation:

The Net Present Value is the Value of Future Cashflows of a Project discounted to their present (today`s) amount using the Company`s Cost of Capital. Managers should accept projects with a positive or higher Net Present Value.