Monday, April 20, 2009
Net Present Value
Net Present Value. The net present value is equal to discounted benefits minus discounted costs. Our $3,000 microcomputer investment yields a cumulative benefit of $4,758.51, or a net present gain of $1,7.'58.51.This value is relatively easy to calculate and accounts for the time value of money. The net present value is expressed as a percentage of the investment-in our example:
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