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Net Present Value – Definition, Formula, Calculation with Example

Net Present Value – Definition, Formula, Calculation with Example

Submitted by • August 20, 2020 courses.skillfinlearning.com

Net Present value is the most effective technique for investors and shareholders and to evaluate project viability for making strategic financial /investment decisions. NPV is an effective measure for making investment decisions. To compute the Net Present value, a firm should determine the cash inflows and the outflows along with the discount rate or a rate of return that firm desires during the lifetime of the project. However, in certain circumstances, NPV may not be a conclusive measure. The firm should also consider the riskiness or limitation of forecasting future cash flows, availability of capital, external environment, etc. before making the investment decision. To become an expert in financial analysis and modeling techniques, you need to master the skills through Financial Analyst courses.

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