A project's net present value can be found by subtracting the cost of the project from the total present value of the future cash flows generated by the project.

(A) True

(B) False

(A) True

Explanation:

Net present value: In this approach, the initial investment is subtracted from the cash inflows of the discounted present value. If the sum comes in positive than the project would otherwise not be beneficial to the company.

In mathematically,

Net present value = Total present value of the future cash flows generated by the project after applying discount factor - the cost of the project

The discount factor should be computed by

= 1 : (1 + discount rate) ^ years