Net present value

 

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Net present value

Same as present value, being sure to include (negative) payments as well as (positive) receipts.

Net present value

A 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.



Similar Matches

Appointed representative

Appointed representative

Salesperson, company or organisation that advises on the investment products specific to one life assurance or investment company.


Present value

Present value

The 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.


Net present value rule

Net present value rule

An investment is worth making if it has a positive NPV Projects with negative NPVs should be rejected.


Registered Representative

Registered Representative

Also known as account executive, customers' broker, or similar title. Describes full-time New York Stock Exchange member organisation sales people who have met the NYSE background and industry knowledge requirements.


Registered representative

Registered representative

A person registered with the CFTC who is employed by and solicits business for a CFTC or CFTC.


Further Suggestions

Proportional representation
Present State
Net present value (NPV)
Present value
company representative (tied agent)
Adjusted present value (APV)
Present value of growth opportunities
AIMR Performance Presentation Standards Implementation Committee
Net present value of growth opportunities
Present Value Index (PVI)
Net adjusted present value
Present value factor


 
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