3 ms·
You are right. Only in a zero-interest-rate environment are they "equivalent" WRT NPV. If you can safely get high returns, then you have to discount them.
by danuker 4y ago
You are right. Only in a zero-interest-rate environment are they "equivalent" WRT NPV. If you can safely get high returns, then you have to discount them.
- danielmarkbruce 4y agoThey are equivalent NPV wise only when the cost of capital is 25%. Cost of capital is a fuzzy concept and different folks have different numbers based on all kinds of things (despite the precise numbers put in spreadsheets). From a practical perspective they will almost never be NPV equivalent.