Final answer:
The statement is true as NPV is the present value of future cash flows, and an NPV of $5,000 means the investment has the same value as $5,000 in cash today.
Step-by-step explanation:
The statement that taking up a project with a Net Present Value (NPV) of $5,000 is equivalent to receiving $5,000 cash today is true. The concept of NPV is based on the principle of time value of money, which suggests that a dollar today is worth more than a dollar in the future because of its potential earning capacity. This calculates the present value of projected cash flows which, if they tally up to $5,000, affirms that it's equivalent to having that same amount in cash today — assuming that the discount rate properly reflects the risk and time preference of the investment.
The present value calculation is crucial when considering bonds, loans, and investments. It represents the current worth of future cash flows, discounted back to the present using a given discount rate. For example, the present value of a $3,000 bond issued at 8% is $3,000 because that is the amount the borrower receives today, and it's equal to what the lender expects in return in today's dollar value.