Intro to Net Present Value (NPV): Part 2 of 2

[@a.besong.o.9321]

God bless u Sir.

[@reubmgmt185]

Would this be the same method if a mortgage or a bond was sold at a discounted rate?

[@rad1oclash]

I understand the math, but I am having a little bit of trouble understanding the significance of the NPV in this scenario. The NPV is $802.40 but does this mean that the present value of $1,000 5 years from now is $802.40? and if so why do we need to know this information when doing a long term investment?

[@hadjersaoudi2384]

Net Present Value means the value of the sum of all the FVs years back - cost of project ( it's years back cause we discount) years forward is when compounding which is different cause in compounding u will have the PV and compound it to get the FV Net Present Value = Present value of all cash flows - cost of project NPV is the sum of all the discounted cash flows that means that the NPV is the today's value of the sum of the future cash flous (cause to get the NPV (we need first to find the PV of each FV and sum them up all and then subtract the result or the total from the initial cost or the money spent initially to run the project ) that means discounting future values into present values then subtract the total of the PV s we found from the initial cost to get NPV ( the net present value without the costs)

[@SamyrOfficial]

Hadjer SAOUDI exactly

[@ahmedbenlarbi2348]

Please the formula to calculate the discount factor 3.6048 . Thank you so much .

[@martinmarshall2624]

thank u sir

[@nengangcharles1138]

The NPV is simply the sum of future discounted cash inflow from a project minus the initial cost of the investment (cash outflow). if NPV>0, we accept the project and if NPV