Net present value/Tutorials

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Tutorials relating to the topic of Net present value.

The net 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 discount rate
  • is the net cash flow (the amount of cash) in year t


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: