--%>
Assignment Help - homework help

Introduction of the term net present value

Give a brief introduction of the term net present value? Write down its admittable rules, their merits and demerits?

E

Expert

Verified

Net present value (or NPV) is a financing word that illustrates the cash flow worth for both outflow and inflow and it is been stated as the sum of the present values of cash flow. NPV is formulated as prospect cash flow subtracted from the buy price. It is as well the tool to compute discounted cash flow and is a standardized method for the determination of capital budgeting. The merits and demerits of it are illustrated below:-

The advantage of NPV is required for long term projects and it evaluates the excess or shortfall of cash flows as it is employed for the reinvestment at the discount rate that is employed for this.

The advantage is that the amendment for this is a less risky and it adds a less of complexity in making the cost higher.

   Related Questions in Business Economics

  • Q : Conception of the Invisible Hand by

    Conception of the “Invisible Hand” by Adam Smith relies on mechanisms like those as underpin: (1) William Stanley Jevons’ “sunspot” theory of business cycles. (2) the biological concept of Homeostasis. (3

    		•
  • Q : The financial investor about bonds

    Describe three ways to finance corporate activity.  Make a case that stocks are more risky for the financial investor than are bonds?

    		•
  • Q : Cchange in demand and a change in the

    Distinguish between a change in demand and a change in the quantity demanded?

    		•
  • Q : Strategic behaviour of decisionmaker If

    If one decisionmaker in interdependent circumstances calibrates its decisions to the anticipated reactions of the other party, in that case the decisionmaker is engaged within: (1) psychological forecasting. (2) profit maximization. (3) collusion. (4) strategic behavi

    		•
  • Q : Exchange is the necessary consequence

    Explain: “Exchange is the necessary consequence of specialization.”

    		•
  • Q : Contestable Markets The least probable

    The least probable of the given industries to be a contestable market is: (1) video rentals. (2) pizza delivery. (3) cable television. (4) trucking. Can someone explain/help me with best solution about problem of <

    		•
  • Q : Write short note on Markets Write short

    Write short note on Markets?

    		•
  • Q : What are patent rights Patent rights :

    Patent rights: It is a unique license or right granted to a company or an Individual to make a specific product or utilize a specific technology.

    		•
  • Q : What are economic resources What are

    What are economic resources? What are the major functions of the entrepreneur?

    		•
  • Q : High-convexity portfolios outperform

    An important drawback of "traditional yield spread analysis" is the "failure to take into account future interest rate volatility that would affect the expected cash flow" of a fixed income security. How does option adjusted spread analysis correct for the "failure" of traditional yield spread analy

    		•