Net present value/Tutorials: Difference between revisions

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*<math>C_t</math> is the  cash flow (the inflow  of cash) in year t  <br>
*<math>C_t</math> is the  cash flow (the inflow  of cash) in year t  <br>


Tabulations of the factors to be applied each year at specified discount rates are to be found in many reference books.
Tabulations of the factors to be applied each year at specified discount rates are to be found in many reference books [http://www.netmba.com/finance/time-value/present/].


Present value becomes '''net present value''' when C is taken to be the '''''net''''' cash inflow after allowing for outflows at the time of purchase of an asset or during the launch phase of a project.
Present value becomes '''net present value''' when C is taken to be the '''''net''''' cash inflow after allowing for outflows at the time of purchase of an asset or during the launch phase of a project.

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Tutorials relating to the topic of Net present value.

The present value of an investment generating cash flows C during n years is given by:

Where

  • is the time of the cash flow
  • is the investor's discount rate
  • is the cash flow (the inflow of cash) in year t

Tabulations of the factors to be applied each year at specified discount rates are to be found in many reference books [1].

Present value becomes net present value when C is taken to be the net cash inflow after allowing for outflows at the time of purchase of an asset or during the launch phase of a project.


The net present expected value, E of a project having a probability P of a single outcome whose net present value is V is given by:

E = PV

Where there are multiple possible outcomes y = 1 ...n with probabilities Py and present values Vy,

then the net present expected value is given by: