Net present value - Revision history

imported>Doug Williamson: Add links.

2022-02-08T09:03:20Z

Add links.

2021-08-11T16:53:07Z

Expand definition.

← Older revision		Revision as of 16:53, 11 August 2021
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	It expressly recognises that the timing of project cash flows is important, as well as the amounts.		It expressly recognises that the timing of project cash flows is important, as well as the amounts.

	It makes future cash flows with different timings directly comparable.		It makes future cash flows with different timings directly comparable, by converting them to equivalent ''present values''.

2021-08-11T15:31:26Z

Expand definition.

← Older revision		Revision as of 15:31, 11 August 2021
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	(NPV).		(NPV).

			Net present value is a discounted cash flow technique.

			It expressly recognises that the timing of project cash flows is important, as well as the amounts.

			It makes future cash flows with different timings directly comparable.


	Net present value is the total present value of all of the cash flows of a proposal - both positive and negative - netting off negative present values against positive ones.		Net present value is the total present value of all of the cash flows of a proposal - both positive and negative - netting off negative present values against positive ones.

2021-08-11T15:20:31Z

Expand heading.

← Older revision		Revision as of 15:20, 11 August 2021
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	''~~Investment~~ appraisal.''		''Project appraisal - discounted cash flow.''

	(NPV).		(NPV).

2020-12-20T22:13:46Z

Expand definition.

← Older revision		Revision as of 22:13, 20 December 2020
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	<span style="color:#4B0082">'''''Decision rule'''''</span>		<span style="color:#4B0082">'''''Decision rule'''''</span>

	In very simple ''Net Present Value analysis'' the decision rule would be that:		In very simple ''Net Present Value analysis'' for investments, the decision rule would be that:

	(1) All positive NPV opportunities should be accepted.		(1) All positive NPV investment opportunities should be accepted.

	(2) All negative NPV opportunities should be rejected.		(2) All negative NPV investment opportunities should be rejected.


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	A more refined decision rule is that:		A more refined decision rule is that:

	#All negative NPV opportunities should still be rejected; while		#All negative NPV investment opportunities should still be rejected; while
	#All positive NPV opportunities remain eligible for further consideration (rather than automatically being accepted).		#All positive NPV investment opportunities remain eligible for further consideration (rather than automatically being accepted).

2020-12-13T18:59:45Z

Update 'expected' to 'forecast'.

← Older revision		Revision as of 18:59, 13 December 2020
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	<span style="color:#4B0082">'''''NPV drivers'''''</span>		<span style="color:#4B0082">'''''NPV drivers'''''</span>

	NPV is driven by the amounts of ~~expected~~ cash flows, their timing, and the cost of capital.		NPV is driven by the amounts of forecast cash flows, their timing, and the cost of capital.

2019-05-05T12:28:51Z

Add links.

← Older revision		Revision as of 12:28, 5 May 2019
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	== See also ==		== See also ==
	* [[Capital rationing]]		* [[Capital rationing]]
			* [[Cost of capital]]
	* [[Discounted cash flow]]		* [[Discounted cash flow]]
	* [[Economic value added]]		* [[Economic value added]]
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	* [[Present value]]		* [[Present value]]
	* [[Residual theory]]		* [[Residual theory]]
			* [[Time value of money]]
	* [[Weighted average cost of capital]]		* [[Weighted average cost of capital]]

	[[Category:Corporate_finance]]		[[Category:Corporate_finance]]

2019-05-05T12:28:06Z

Add heading.

2019-03-03T12:55:49Z

Identify outflow as negative in first calculation.

2019-03-03T12:54:31Z

Increase decimals.