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Net present value (NPV) |
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Net present value (NPV)The present value of the expected future cash flows minus the cost.Net present value (NPV) Similar MatchesPresent valuePresent valueThe amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future. To determine the present value, each future cash flow is multiplied by a present value factor. For example, if the opportunity cost of funds is 10%, the present value of $100 to be received in one year is $100 x [1/(1 + 0.10)] = $91. Appointed representativeAppointed representativeSalesperson, company or organisation that advises on the investment products specific to one life assurance or investment company. Net present valueNet present valueA calculation which is based on the idea that £1 received in ten years' time is not worth as much as £1 received now because the £1 received now could be invested for those ten years and compound into a higher value.The NPV calculation establishes what the value of future earnings is in today's money. To do the calculation you apply a discount % rate to the future earnings. The further out the earnings are (in years) the more reduced their present value is.NPV is at the heart of securities analysis. Analysts use predictions of a company's future earnings and dividend payments, appropriately discounted back to current value, to establish a 'fundamental' value for the shares. If the current share price is below that value, then the shares are, on the face of it, attractive, If lower, they are 'overvalued'. In practice the analysis is more sophisticated, but it is based on the concept of NPV. Net adjusted present valueNet adjusted present valueThe adjusted present value minus the initial cost of an investment. AIMR Performance Presentation Standards Implementation CommitteeAIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR) Performance Presentation Standards Implementation Committee is charged with the responsibility to interpret, revise, and update the AIMR Performance Presentation Standards (AIMR-PPS(TM) for portfolio performance presentations. Further SuggestionsPresent value factorNet present value of growth opportunities Net present value Present value company representative (tied agent) Adjusted present value (APV) Present State Registered Representative Registered representative Present value of growth opportunities Present Value Index (PVI) Proportional representation Net present value rule |
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