Respuesta :
Net Present value = Present value of Cash inflows - Present value of Cash outflow is the method for evaluating capital investment proposals reduces the present value of cash outflows from the present value of cash inflows.
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project. Net Present value is the result of calculations used to find the current value of a future stream of payments.
Net Present value accounts for the time value of money and can be used to compare the rates of return of different projects, or to compare a projected rate of return with the hurdle rate required to approve an investment.
The time value of money is represented in the Net Present value formula by the discount rate, which might be a hurdle rate for a project based on a company's cost of capital. No matter how the discount rate is determined, a negative Net Present value shows the expected rate of return will fall short of it, meaning the project will not create value.
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