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Net Present Value of Investment

Last modified by
on
Jul 24, 2020, 6:28:07 PM
Created by
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Sep 15, 2014, 1:59:28 PM
`NPV = {:{:{: C_1 :}/(1+{: "r" :}) :} - {:{: "C" :}:}:}`
C_1
r
VAR1
Tags
Accounting
UUID
825cd868-3ce0-11e4-b7aa-bc764e2038f2

The Net Present Value of Investment (NPV) evaluates a capital investment by discounting the future cash flows to their present values and subtracts the amount of the initial investment from their sum. NPV is used to analyze an investment decision. This will give the company an idea whether or not the investment will add value to the company. If an investment has a positive NPV, it will add value to the company. If an investment has a negative NPV, it will not add value to the company. 

Input Variables:

C_1 - Cash flow

r- Rate of return

C - Cost

Output for the Formula:

Returns the Net Present Value of Investment

/attachments/825cd868-3ce0-11e4-b7aa-bc764e2038f2/NetPresentValueofInvestment-illustration.png

Notes

Discounting represents the present value of a future cash flow.
This equation, Net Present Value of Investment, references 2 pages
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