Asked by Melissa Borrero on Jul 08, 2024
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Net present value and the payback period are examples of discounted cash flow methods used in capital investment decisions.
Net Present Value
A calculation that compares the present value of a project’s cash inflows with the present value of its cash outflows, used in capital budgeting to assess profitability.
Payback Period
The length of time required to recoup the initial investment in a project, ignoring the time value of money.
Capital Investment
Funds invested in a business with the aim of furthering its business objectives, such as purchasing assets or funding new growth initiatives.
- Gain an understanding of the mechanics behind net present value analysis and its impact on investment in capital.
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Learning Objectives
- Gain an understanding of the mechanics behind net present value analysis and its impact on investment in capital.
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