The present values of both cash inflows and cash outflows are important in deciding whether an investment is acceptable.
When the net present value is greater than or equal to $0, the present value of the projected cash inflows is equal to or greater than the present value of the projected cash outflows and the NPV is positive (or zero). The project will increase shareholder wealth or at least it will not decrease it. That project is acceptable, provided funds are available to invest in the project.
When the present value of cash inflows is less than the present value of cash outflows, the project's NPV will be negative, and the project would decrease the wealth of the shareholders. That project is not acceptable.
The present values of both cash inflows and cash outflows are important in deciding whether an investment is acceptable.
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