The discounted sum of a project's present and future
cash flows. In theory all projects with positive a NPV should be
viable, though it is common experience that this is not the case. The
interest rate (r) where the NPV is zero is
internal rate of return (IRR).
NPV is generalized:
Σct/(1+rt)t for t = 1..n
- t
- is the zero-base number of the period
- c
- is the signed cash flow
- r
- is the interest rate for period t