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NPV- Net Present Value
NPV- Net Present Value
Why study NPV?
Why study NPV?
If a person earn 10 Lakh this year and 12 Lakh after 5 years, then we cannot simply say that he/she earned more after 5 years.
We have to convert 12 Lakh to the right value it represent today.
Only then we can compare the two salaries.
And this value after conversion is called NPV(net present value)
Some more uses:
Some more uses:
Calculation of price of bonds
Estimation of company's valuation
Making investment decision by companies in different projects
Calculating price of stock
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