💰 CPA Exam Prep

What does NPV (Net Present Value) measure?

A Accounting profit
B The difference between the present value of cash inflows and outflows
C The payback period
D Revenue growth

✓ Correct Answer: Option B

NPV discounts future cash flows to present value and subtracts the initial investment. Positive NPV = accept project.

💡 Why is B) the correct answer?

The correct answer to the question "What does NPV (Net Present Value) measure?" is Option B: The difference between the present value of cash inflows and outflows.

The other options — A) Accounting profit, C) The payback period, D) Revenue growth — are incorrect for this CPA Exam Prep question. As explained above: NPV discounts future cash flows to present value and subtracts the initial investment. Positive NPV = accept project.

📚 About This CPA Exam Prep Practice Question

This 2-level CPA Exam Prep question from the Business Environment (BEC) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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