3 ms·

can someone explain this?

• recursivedoubts 5y ago
  A naive NPV calculation discounts a cash flow by a real discount rate: https://www.investopedia.com/terms/n/npv.asp https://www.investopedia.com/terms/n/npv.asp when the discount rate is 0, the NPV is simply the sum of all payments in the series, so an infinite series of payments (e.g. rental income) is worth infinity in reality, bad stuff happens: building burn down, renters leave, etc. so the right thing to do is to discount the payment stream by some risk function, particular far off payments