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Unformatted text preview: o It’s all about preferences • Acceptance Criterion: NPV o Number of years (n) o Interest (i) o Present Value (PV) o Payment (PMT) o Future Value (FV) NPV > 0: Accept the investment NPV< 0: Reject the investment NPV = 0: Marginal • Acceptance Criterion: Benefit Cost Ratio o BCR: Present value of cash inflows / Present value of cash outflows o Accept when BCR > 0, Reject when BCR < 0 • AC: IRR o Internal Rate of Return: Discount rate at which the investment’s NPV equals zero...
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- Fall '08
- Net Present Value