Cisco Question: Chapter 11 3. Briefly explain how NPV is computed and interpreted.

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Reply to one (1) peer. select the initial reply of a classmate that answers a different prompt and reply. Reply with constructive criticism, a question to clarify, or a question to continue the conversation. Net Present Value (NPV) is calculated by subtracting the initial investment cost from the present value of expected future cash inflows. If NPV is positive, it suggests the investment is potentially profitable, while a negative NPV indicates potential losses. It's a key financial metric used to evaluate the profitability of an investment, considering the time value of money. Higher NPV generally signifies a more attractive investment opportunity