Get Instant Help From 5000+ Experts For
Get Instant Help From 5000+ Experts For
  

Net Present value

By HWA | Publish On: May 15, 2010 | Posted In:

Net Present value 

is the difference between the present value of cash inflows and the present values of cash outflows. It is used in capital budgeting to analyze the profitability of an investment.
The formula for NPV is,

In other words, NPV compares the value of money today and the value of the same amount of money in the future. If the NPV is positive for a project or an investment then we can accept it. If the NPV is negative then reject the project.
if a retail grocery business wants to purchase an existing store, it would first estimate the future cash flows that store would generate, and then discount those cash flows into one lump-sum present value amount, say $600,000. If the owner of the store was willing to sell his business for less than $600,000, the purchasing company would likely accept the offer as it presents a positive NPV investment. Conversely, if the owner is not willing to sell for less than $600,000, the purchaser would not buy the store, as the investment would present a negative NPV at that time and would, therefore, reduce the overall value of the business.

About the Company: HelpWithAssignment.com is an online tutoring company. Our network spans 3 continents and several countries. We offer three kinds of services: Assignment Help, Thesis Help and Online Tuitions for students in their college or University. https://www.helpwithassignment.com/

Book Your Assignment

Drop files here or click to upload.
Or click here to upload

Recent Posts

How To Prepare An Excellent Thesis Defense?

Read More

How to Restate A Thesis? – A Detailed Guide

Read More

Explanatory Thesis: Examples and Guide for Clear Writing

Read More

How To Write 3 Types Of Thesis Statements?

Read More

How to Effectively Prepare for Your Thesis Defense?

Read More

Get assignment help from subject matter experts!

4.7/5 rating | 10,000+ happy students | Great tutors 24/7