Business management - Making financial decisions - Net Present Value

Net Present Value

Method

• Identify all the values
• Add the scrap if available to the final value 
• Multiply the first value by the discount factor
• Multiply future values by the discount factor to the power of the position in list
• Add up all new values
• Minus initial investment 
• Leaves the value as the NPV

Advantages

• Uses cash flows rather than…