Project Integration Management

Question 1

What is Present Value (PV) and how is it calculated?

Answer 1

Value today of future cash flows
PV = FV/(1+r)n
where
FV = future value
r = interest rate
n = number of time periods

Question 2

What is Net Present Value (NPV)?

Answer 2

Present value of the total benefits (income or revenue) minus the costs over many time periods