How to Calculate a Project's NPV?
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- Опубліковано 8 гру 2019
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How to Calculate a Project's NPV?
In this video, you will learn what a net present value is and how to calculate it. Estimating the NPV of a project is crucial as it helps to determine whether an investment is worth taking. The process includes 4 steps and we will take time to explain each one of them.
The video is part of our CFA Bootcamp course. You can check out the entire course on Udemy:
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![IRR vs. NPV - Which To Use in Real Estate [& Why]](http://i.ytimg.com/vi/hGw2J__2adU/mqdefault.jpg)
![IRR vs. NPV - Which To Use in Real Estate [& Why]](/img/tr.png)
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Mais
thanks for the video
PLS DO MORE ON STOCK MARKET ANALYISING AND PREDICTIONS VIDEO!!
@@timetimetime3985 thank you so much!!!
Because r cannot be constant year after year, thus adding to the uncertainty, doesn't it make sense to have a threshold on positive NPV given the additional uncertainty? NPV is only as good as the underlying assumptions of a project - compare that to opportunity cost of a more definitive, say a fixed deposit scheme?
Yes, risk premium compensates for that, even then, I still do not understand, in general, r is simply taken as constant year after year..
In the opposite case, that is compound interest, r can be fixed because it is controlled by bank.. but here, r is highly dynamic.. how do we account for this?
It is possible to determine the NPV knowing only the discount rate and investment ?
So therefore a NPV (cash in flow- cash outflow present)(NPV=LIM LIMIT N - T=0)(CFT÷1+R)^T if i have cash inflows of 300,000 and outflows of 100,000 )( lets say where calculating NPV at 5% )(my total cost is 200,000 cft=- projected life of 20 investment=0,5+1^20 NPV would be $83,760.25.
The house refurbishment example is flawed in that no time-factor is included. Eg if it took 50 years to refurb the house, the opportunity cost surely would be higher than the initial investment.
Not really. It's an example of NPV without adding the time factor. You can work our NPV with a time value of 0. It's just not very useful. It's about building the equation to help someone learn.
Exactly, poor example. Not a great video.
Standard business school fallacy to say if NPV is positive we should invest. Wrong. It needs to be better than merely positive. Example: NPV of +1% is unacceptable.
Should be the time value of currency, not money. The word money is not printed on currency. Money is gold and silver. Also, a dollar is 371.25 grains of Silver, per the 1792 Coinage Act, and has never been repealed. Narrator should be stating Federal Reserve Note. As it takes approximately 35 Federal Reserve Notes to purchase 1 Dollar. They are not synonyms.