Which calculation indicates a profitable investment?

A positive Net Present Value (NPV) indicates a profitable investment because it represents the difference between the present value of cash inflows generated by the investment and the present value of cash outflows, discounted at a specific rate. When NPV is positive, it signifies that the projected earnings (considering the time value of money) exceed the costs, which means the investment is expected to generate more value than it costs, making it worthwhile.

In terms of investment decision-making, a positive NPV suggests that the project is likely to contribute positively to the investor's wealth and is generally deemed a good investment opportunity. This is a fundamental concept in capital budgeting, guiding investors in selecting projects that will yield beneficial returns compared to other potential uses of their capital.