The NPV of a projet or investment is determined by the following:

Present Value of Projected Cash Flow - Initial Cost = NPV

The project will be approved if the NPV is zero or higher.
If the NPV is negative, the project will be rejected as it does not meet the companys required rate of return.

Discounted Cash Flow is the process that the projected cash flow compared with the cost of the investment using todays dollars(presetn value).

Projected Cash Flow means the incremental(addtional) cash flows that will result from the investment.

When we discaount the future cash flow a company needs to set a target or hurdle rate.
This represents the minimum level of return that a company must obtain in order for an investment to be acceptable.

We must understand this, and we must wise investment and never run out of cash.

NHK CD BOOK 英語で学ぶMBAベーシックス 増補改訂版 (NHK CDブック)

NHK CD BOOK 英語で学ぶMBAベーシックス 増補改訂版 (NHK CDブック)

  • 作者: 藤井正嗣,リチャード・シーハン
  • 出版社/メーカー: NHK出版
  • 発売日: 2012/08/08
  • メディア: 単行本(ソフトカバー)
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