Net Present Value Method

Net Present Value (NPV) Method is discounted cash-flow method that calculates the expected net monetary gain and loss from a project by discounting all expected future cash inflows and outflows to the present point in time, using the required rate of return.

Time Value of Money

Time Value of Money: Learning Objectives: Explain the concept of time value of money. Why time value of money concept is important in capital budgeting analysis? Explanation of of the Concept of Time Value of Money Investments commonly involve returns that extend over fairly