NPV stands for Net Present Value and is a financial calculation used to determine the value of a project or investment. It takes into account the cost of the investment, the expected cash flows, and the time value of money to calculate the present value of the investment. NPV is used to compare different investments and determine which one is the most profitable.
A NPV Calculator is a tool used to calculate the net present value (NPV) of a series of cash flows. It is used to determine the profitability of a project or investment by taking into account the time value of money. The NPV calculator takes into account the initial investment, the discount rate, and the cash flows associated with the project or investment.
1. Calculate the cash flows for each period. 2. Discount the cash flows using the required rate of return (discount rate). 3. Sum up the discounted cash flows to get the net present value (NPV). NPV = ∑ (Cash Flow / (1 + Discount Rate)^Period)
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