The Net Present Value (NPV) method is a financial technique used to assess the profitability of an investment or project by comparing the present value of future cash inflows to the initial investment. The formula for NPV is:
Where:
This formula sums the present value of all future cash inflows and subtracts the initial investment, yielding the NPV, which can be positive, zero, or negative. A positive NPV indicates profitability, while a negative NPV suggests the investment may not be financially viable.
When calculating NPV, it's essential to remember that the process of discounting cash flows is straightforward once the cash flows and discount rate are known. However, the real challenge lies in accurately estimating those cash flows and the appropriate discount rate. As these are only estimates, the actual NPV may vary, emphasizing the importance of making reliable projections.
章から 7:
Now Playing
Capital Budgeting
137 閲覧数
Capital Budgeting
237 閲覧数
Capital Budgeting
128 閲覧数
Capital Budgeting
95 閲覧数
Capital Budgeting
277 閲覧数
Capital Budgeting
142 閲覧数
Capital Budgeting
85 閲覧数
Capital Budgeting
49 閲覧数
Capital Budgeting
69 閲覧数
Capital Budgeting
251 閲覧数
Capital Budgeting
54 閲覧数
Capital Budgeting
144 閲覧数
Capital Budgeting
39 閲覧数
Capital Budgeting
46 閲覧数
Capital Budgeting
47 閲覧数
See More
Copyright © 2023 MyJoVE Corporation. All rights reserved