net present value Flashcards
1
Q
NPV
A
the present value of future income from an investment project, minus the cost
2
Q
advantages
A
evaluate likely success of a project considers total cash flow of a project takes into account the time value of money reduces long term impact decision making mechanism
3
Q
disadvantages
A
complex calculation (resource heavy)
rate of discount is critical
difficult to select appropriate rate
initial investment affect calculation
4
Q
NPV calculation
A
present value- capital cost
5
Q
PV calculation
A
net cash flow x discount rate
