Present Value (PV) and Net Present Value (NPV): The One-Period Case

This video shows how one can use the concepts of Present Value (PV) and NET Present Value (NPV) to decide whether or not to pursue an investment. The setting is a simple one in which the investment requires an upfront investment and yields a single cash inflow one year after the investment is made. I explain why, in general, positive NPV projects are 'good' investments while negative NPV projects are 'bad investments'.
ABOUT ME:
My name is Atif Ikram. I am a Clinical Professor of Finance at Arizona State University, where I teach courses in Corporate Finance, Personal Finance, Real Estate Finance and Investments (wpcarey.asu.ed....
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[@Turakjan]

Thanks for easy explanation!

[@francoisduvenhage7116]

Great work! Appreciate your effort

[@aliiqbal7368]

Why do you use the annual interest rate to work out present value?

[@professorikram]

For an introductory class in finance, this is the easiest way to communicate the idea - students can easily relate to APRs. Onne can easily adjust the formula to account for monthly rates.