Net Present Value Approach Flashcards
1
Q
What is net value approach (NPV)
A
Determines the present value of expected cash inflows and compares that value with the present value of expected outflows in the project
Uses the discount rate (called hurdle rate)- based on WACC
NPV > = Accept project
NPV < 0 = Regject Project
PV Sum (discounted) - Cost of project = If positive then you accept
