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Net present value (NPV) is the most versatile investment metric. It’s based on forecasted cash flows and the opportunity cost of capital. You should accept any investment projects with NPV greater than zero. NPV is an absolute measure, it recognizes the time value of money, and is less prone to interpretation mistakes than its alternatives. [...] “A dollar today is worth more than a dollar tomorrow.” You may have heard this phrase few times before and there is a reason for that: time value of money needs to be considered in every financial analysis that covers more than one time period. This is also the first basic principle of finance. So, [...] |
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