NetPresentValueandOtherInvestmentCriteria(英文版)(36页).pptVIP

Topics Covered Net Present Value Other Investment Criteria Project Interactions Capital Rationing Net Present Value Opportunity Cost of Capital - Expected rate of return given up by investing in a project. Net Present Value Example Suppose we can invest $50 today and receive $60 in one year. What is our increase in value given a 10% expected return? This is the definition of NPV Net Present Value NPV = PV - required investment Net Present Value Terminology C = Cash Flow t = time period of the investment r = “opportunity cost of capital” The Cash Flow could be positive or negative at an