Understanding net present values

Source: FE

Finance professionals are heavily dependent on Excel functions to do complex time value calculations. These calculations are used to evaluate cash flows of projects or payoffs of complex non-linear derivative instruments.

These involve finding out the internal rate of returns (IRR) for different types of financial problems. Technically, an IRR is nothing, but the rate at which the net present value of a payoff becomes zero. Net present value (NPV) is basically the difference between the present value of cash inflows and present value of cash outflows.

Click here for the complete story
Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s