3.3.2 -Investment appraisal - Discounted cash flow (net present value) (3/3) Flashcards
1
Q
Discounted Cash flow (DCF)
A
A method of investment appraisal that takes interest rate into account by calculating the present value of future income
2
Q
Present value
A
The value today of a sum of money available in the future
3
Q
Net present value
A
The present value of future income from an investment project, minus the cost.
4
Q
When making an investment decision what might a business take into account?
A
What cash flow or profit earned in the future is worth at its present value.
5
Q
Discount tables are used for what?
A
To show how much a future value must be multiplied by to calculate its present value.
