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 : Describe the duty of bondholders in a

    Describe the duty of bondholders in a bond?

  • Q : Determine the relative cost of a product

    If banana divides are $2, CD disks are $10, and SCUBA vacations are $360, then what is the relative cost of a SCUBA vacation in phrases of a CD disk: (i) 36 disks. (ii) 360 disks. (iii) 180 disks. (iv) 20 disks. (v) 3,600 disks.

    Q : Describe Net income approach Briefly

    Briefly describe Net income approach? Named who recommended this theory?

  • Q : Explain the term leverages Briefly

    Briefly explain the term leverages?

  • Q : Different types of leverages in

    Write down the different types of leverages which are computed for financial analysis?

  • Q : Demand supply Newspaper item: “Due to

    Newspaper item: “Due to lower grain prices, consumers can expect retail prices of choice beef to begin dropping slightly this spring with pork becoming cheaper after midsummer,” the Agriculture Department predicted. “This reflects increasing supply,” the department said. Does the statement use th

  • Q : New firms entry in industry What

    What persuades new firms to enter in an industry? Answer: Abnormal profit encourages new firms to enter an industry. 

  • Q : The federal fiscal stimulus Question:

    Question: Was the stimulus package passed in 2009 as success?  In answering this question the focus should be the articles on the syllabus, but you should also include opinions of other commentators.   Your answer should also describe w

  • Q : Limitation of building blocks for a

    Building blocks for a capitalist system would not consist of: (1) supplies and demands. (2) private property rights. (3) laissez-faire policies. (4) market-found prices and outputs. (5) distribution of income in accord along with the principle, &ldquo

  • Q : What do you mean by Graphs What do you

    What do you mean by Graphs?

©TutorsGlobe All rights reserved 2022-2023.