CapitalBudgeting_201.. - CITT
CapitalBudgeting_201.. - CITT
CapitalBudgeting_201.. - CITT
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Discounted Cash Flow –<br />
Net Present Value (NPV)<br />
• The project’s NPV is the net value in today’s dollars<br />
of the cash in-flows and out-flows. The TVM factor<br />
is not violated because all of the cash flows are<br />
discounted back to the present. The deciding<br />
criteria are:<br />
• NPV => 0, accept project because the project’s return on<br />
investment (ROI) is equal to or greater than the firm’s<br />
required rate of return (RRR).<br />
• NPV < 0, reject project because the project’s ROI is less<br />
than the firm’s RRR.<br />
• NPV = 0, then the project is returning the firm’s RRR.<br />
©2012, Varmelous Ind. Inc. -- Slide 20
Change language