Net present value
You'll learn how to discount future cash flows back to their present value and apply net present value as a project appraisal tool.
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In this lesson
- 0:00 Net present value and discounting overview
- 0:16 Understanding discounting and present value
- 1:18 Discount factor formula and variations
- 2:49 Using present value tables efficiently
- 5:49 Net present value as project appraisal tool
- 6:37 NPV assumptions and key considerations
- 8:18 NPV decision rule and interpretation
About this lesson
This video covers the core technique of discounting using both formulas and present value tables, then shows you how to calculate NPV by comparing the present value of all cash inflows and outflows. You'll understand the decision rule—positive NPV means accept the project, negative means reject—and why this matters for assessing whether an investment increases shareholder wealth. Essential for FM, AFM, and performance management papers where investment appraisal is tested regularly.
Duration: 10m
Transcript
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