In: Finance
What is the Net Present Value?
What is the Internal Rate of Return?
What is the Payback Period?
What is Net Present Value
Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
What Is Internal Rate of Return
The internal rate of return is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return is a discount rate that makes the net present value of all cash flows from a particular project equal to zero. calculations rely on the same formula as does.
What Is the Payback Period?
The payback period refers to the amount of time it takes to recover the cost of an investment. Simply put, the payback period is the length of time an investment reaches a break-even point.
The desirability of an investment is directly related to its payback period. Shorter paybacks mean more attractive investments.