Mathematics of FinanceMCQMTP May 19Question 1576 of 512
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Net Present Value (NPV)

Options

APresent value of net cash inflow - Total net investment
BPresent value of net cash inflow
CPresent value of cash outflow
DNone of these
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Correct Answer

Option cPresent value of cash outflow

All Options:

  • APresent value of net cash inflow - Total net investment
  • BPresent value of net cash inflow
  • CPresent value of cash outflow
  • DNone of these

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Detailed Solution & Explanation

Net Present Value (NPV\displaystyle NPV) is defined as: NPV=Present Value of Cash InflowsPresent Value of Cash OutflowsNPV = \text{Present Value of Cash Inflows} - \text{Present Value of Cash Outflows} Which is equal to: Present value of net cash inflowTotal net investment\text{Present value of net cash inflow} - \text{Total net investment} Mathematically, this corresponds to Option A. However, the official key marks Option C. Hence, **Option C** is the correct answer.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

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