NPV -...

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Net present value method is that method of  capital budgeting   which is considered better than  pay back period method  and  rate of return  method  for evaluation the  investment proposals or  assets  of different  companies . In NPV method, we calculate net present value of  cash  flows  after deducting present value of  cash  outflows from present value of cash inflows. This NPV is calcuated for each investment  project. Only that investment project is accepted whose net present value will be high. Now, you can understand what is this method. In this  method, I have used the term present value. Without knowing present value, you can not calculate net present value.  Simple Definition of Present Value and Value of Money Present value means today value of one dollar. It is also value of  money . Given money is one dollar. It may possible that value of one dollar 
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This note was uploaded on 10/19/2011 for the course FINANCE 302 taught by Professor Staff during the Fall '10 term at East West University, Chicago.

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NPV -...

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