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Can some one explain NPV to me? This is the first I am hearing of this term and wikipedia does not offer an explanation that is intuitive enough. Its odd that t
by yalogin 13y ago
Can some one explain NPV to me? This is the first I am hearing of this term and wikipedia does not offer an explanation that is intuitive enough. Its odd that the NPV is listed as $40K+ when the actual cost of the car is $90K+.
- dm2 13y agohttps://www.khanacademy.org/economics-finance-domain/core-finance/interest-tutorial/present-value/v/introduction-to-present-value https://www.khanacademy.org/economics-finance-domain/core-fi... http://www.investopedia.com/video/play/what-is-net-present-value/ http://www.investopedia.com/video/play/what-is-net-present-v... https://www.youtube.com/watch?v=jylJ2r9bklE https://www.youtube.com/watch?v=jylJ2r9bklE
- jellicle 13y agoNet present value is a way of measuring future flows of money and comparing them to each other. For instance, which is worth more: - Getting $100 now - Getting $200 3 years from now The answer is, "it depends on your assumptions about interest rates". In the blog poster's spreadsheet, the "net" line is the cost of owning that car in that year in that year's dollars. The PV is the cost of owning that car in that year in THIS year's dollars (a figure obviously depending on assumptions about interest rates). The NPV line is the cost of owning that car for 8 years in this year's dollars.
- superprime 13y agoThe underlying idea is that a dollar today is worth more to you than a dollar tomorrow (all else equal). The NPV is how much a thing is worth/costs now after taking that into account and discounting future cashflows appropriately.