In the net present value method, managers sum the present values of all expected future cashflows from the project and subtract the initial investment. True False

This statement is about the calculation method of the Net Present Value (NPV), which is a popular method employed to assess the profitability of an investment or a project.## Step 1: Clarification of Net Present Value Calculation MethodNet Present Value calculation involves calculating the present values of all expected future cash inflows from the project and then subtracting the present value of the initial investment (which is usually considered a cash outflow as it leaves the business). A key feature to consider here is that future cashflows are discounted back to their present value. This "discounting" considers the time value of money which essentially means that a dollar today is worth more than a dollar in the future due to unpredictable elements such as inflation or unforeseen events. This process uses a specified discount rate to determine these present values. ### where represents cash inflows during the period , is the discount rate, and is the initial cash outflow (the project's initial investment cost).## Step 2: Verification of the StatementThe statement rightly suggests that in the net present value method, managers sum the present values of all expected future cash flows resulting from the project. Additionally, it accurately states that the initial investment cost is subtracted from this total. Therefore, the statement given is true.