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8 Cards in this Set
- Front
- Back
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Net Present Value
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PV of inflows (investments market value) - Cost
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Discounted cash flow valuation (DCF)
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The process of valuing an investment by discounting its future cash flows
procedure of NPV |
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net present value profile
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a graphical representation of the relationship between an investment's NPV and various discount rates
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independent projects
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if the cash flows of one are unaffected by the acceptance of the other
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mutually exclusive projects
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if the cash flows of one can be adversely impacted by the acceptance of the other
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multiple rates of return
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the possibility that more than one discount rate makes the NPV of an investment zero
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Normal cash flow stream-
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cost (negative CF) followed by a series of positive cash inflows, one change of signs
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nonnormal cash flow stream
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two or more changes of signs, most common; cost(neg) then string of positive CF's then cost to close project (nuclear power plant, strip mine)
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