Simcorpcom mitigate risk reduce cost enable growth

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Unformatted text preview: . At SimCorp, we value commitment and enable you to make the most of your ambitions and potential. Are you among the best qualified in finance, economics, IT or mathematics? Find your next challenge at www.simcorp.com/careers www.simcorp.com MITIGATE RISK REDUCE COST ENABLE GROWTH Download free ebooks at bookboon.com 23 Corporate Finance The net present value investment rule 4. The net present value investment rule Net present value is the difference between a project's value and its costs. The net present value investment rule states that firms should only invest in projects with positive net present value. When calculating the net present value of a project the appropriate discount rate is the opportunity cost of capital, which is the rate of return demanded by investors for an equally risky project. Thus, the net present value rule recognizes the time value of money principle. To find the net present value of a project involves several steps: How to find the net present value of a project 1. Forecast cash flows 2. Determinate the appropriate opportunity cost of capital,...
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This note was uploaded on 10/26/2012 for the course 19 19 taught by Professor - during the Spring '12 term at Sunway University College.

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