26 Newton
+65 97587925
enquiry@starcresto.com

What is Net Present Value?

What is Net Present Value?

 

  • Net present value is the difference between an investment’s market value (in today’s dollars) and its cost (also in today’s dollars).
  • Net present value is a measure of how much value (in dollars) is created by undertaking this investment
  • An investment should be accepted if the NPV is positive and rejected if it is negative.
  • Estimation of the future cash flows and the discount rate are important in the calculation of the NPV

Comments: 1

  1. […] that the return is more than the cost and hence one should accept the project When NPV > 0 (represented by the blue line) –>this implies that the shareholder’s […]

Comments are closed.